## Cultivating opportunities ### Annual report and accounts ### for Hargreave Hale AIM VCT plc ### year ended 30 September 2024 ## Contents ### Page ### Strategic report ### Financial highlights for the year ended 30September 2024 3 ### Financial calendar 3 ### Chair’s statement 4 ### The Company and its business model 10 ### Investment objectives, policy and strategy 11 ### Key performance indicators 14 ### Section172 statement 17 ### Principal and emerging risks and uncertainties 21 ### Long-term viability statement 23 ### Other matters 24 ### Summary of VCT regulations 25 ### The Investment Manager and the Administrator 26 ### Investment Manager’s report 28 ### Investment portfolio summary 32 ### Top ten investments 36 ### Governance ### Board of Directors 40 ### Directors’ report 41 ### Directors’ remuneration report 45 ### Corporate governance 50 ### Report of the Audit Committee 56 ### Report of the Management and Service Provider Engagement Committee 59 ### Statement of Directors’ responsibilities 60 ### Financial statements ### Independent Auditor’s report 63 ### Income statement 71 ### Balance sheet 72 ### Statement of changes in equity 73 ### Statement of cash ows 75 ### Notesto the nancial statements 76 ### Alternative performance measures 92 ### Glossary of terms 94 ### Shareholder information 98 ### Company information 100 ### Notice of Annual General Meeting 101 ### 1 ## Strategic report ### 2 ## Highlights The report has been prepared by the Directors in accordance with the requirements of Section414A of the Companies Act2006. Financial highlights for the year ended 30September 2024 Net asset value NAV total return Tax free dividends Share price total Ongoing charges (“NAV”) per share paid in the period return ratio (“OCR”) | | | | (1) | | (1) | | (1) | | --- | --- | --- | --- | --- | --- | --- | --- | | 40.55p | | -3.86% | | 4.00p 0% | | 2.43% | | | ● | £9.2million invested in Qualifying Companies in the year. | | | | | | | | ● | 100% invested by VCT tax value in Qualifying Investments at 30September 2024. | | | | | | | | ● | Final dividend of 1.25pence per share proposed for the year end and special dividend of 1.50pence per | | | | | | | share approved by the Board. ● Oer for subscription closed having raised £20.3million. The Board decided to utilise the over-allotment facility only to the extent that valid applications were received by 5pm on 22March 2024. ● New Oer for subscription launched on 9October 2024 to raise up to £20million. Summary nancial data 2024 2023 NAV (£m) 148.01 151.92 NAV per share (p) 40.55 46.34 (1) NAV total return (%) -3.86 -14.70 Market capitalisation (£m) 142.34 140.96 Share price (p) 39.00 43.00 (1) Share price discount to NAV per share (%) -3.82 -7.21 (1) Share price 5year average discount to NAV per share (%) -5.79 -5.64 (1) Share price total return (%) 0.00 -23.51 Loss per share for the year (p) -1.86 -9.32 Dividends paid per share (p) 4.00 5.00 (1) Ongoing charges ratio (%) 2.43 2.24 (1) Alternative performance measure denitions and illustrations can be found on pages 92 to 93. Financial calendar Record date for nal dividend 3January2025 Payment of nal and special dividends 14February2025 Annual General Meeting 6February 2025 Announcement of half-yearly results for the six months ending 31March 2025 June2025 Payment of interim dividend (subject to Board approval) July2025 ### 3 ## Chair’s statement Introduction of the budget gave an early indication of the likely Once again, I would like to welcome Shareholders impact of higher taxation. That having been said, who joined us as a result of the recent oers for the signicant increase in Government spending subscription. As always, we are grateful to new and announced at the budget is expected to lift the existing Shareholders who continue to support the economy in 2025 and 2026, albeit at a cost. VCT, despite the dicult times we continue to live Consistent with our updates of the last few years, through. generating performance remains very dicult in For much of the 2024 nancial year, investor the shortterm. Whilst we entered the second half sentiment improved as UK ination (Consumer Price of the nancial year with grounds for optimism, the Index) returned to the Bank of England’s target of uncertainty created by the election, the potential 2%, drawing to a close a 3-year ination cycle that for a radically dierent approach to scal policy by was very dicult for UK consumers and households the new Government and its stark messaging again and bringing with it hope that the United Kingdom undermined condence in UK small companies. can nally move on from the cost-of-living crisis. The Whilst we believe investors still recognise the economy has withstood the pressure better than value opportunity within the UK stock market, and many had predicted. All the same, businesses and specically within small companies, many adopted a households had to navigate an immensely dicult wait and see approach pending the outcome of the period of high ination and stagnating economic 2024 Autumn Budget. Three years of outows from activity. With ination now on target and the Bank UK funds have weighed heavily on performance. We of England starting to reduce interest rates, many continue to believe that the sector is in deep value businesses and households can look forward to territory. There is a saying within the stock market reduced borrowing costs. that ‘value will out’; unfortunately, it is proving very dicult to forecast when that might happen. For the Although the Investment Association continues to time being, we will need to remain patient. report sustained outows from UK equity funds, there was an improvement in the ow dynamic within The fog of uncertainty that hung over the UK markets UK small companies after the UK economy returned ahead of the 2024 Autumn Budget continues to growth in early 2024 and UK ination returned to to weigh on the primary markets through which target. More recent updates highlight a deteriorating companies raise new capital. With valuations trend in the run up to the 2024 Autumn Budget so depressed and very little capital available for as markets responded to the Government’s very investment (away from VCTs), very few companies negative messaging and potential changes to scal have undertaken an initial public oering (“IPO”). On policy. It is premature to take a denitive position AIM there were just two VCT qualifying IPOs within on the impact of the Government’s 2024 Autumn the year. Ironically, neither IPO succeeded in raising Budget on our portfolio companies. Clearly, changes any funds from the established AIM VCTs. After a to National Insurance Contributions are going to dicult third quarter, we are pleased to report a weigh heavily on certain companies, particularly stronger nal quarter in which we deployed capital those in high service, low margin industries such into VCT qualifying companies in line with our revised as those in leisure and hospitality. There are a budget. The improved activity levels have continued number of portfolio companies that will feel the into the new nancial year and the Investment impact. However, their response is likely to include Manager reports that its network of investment price increases, less employment and downward banks and corporate advisers are signalling that pressure on wages as companies look to mitigate interest in IPOs is starting to recover and activity is the additional tax burden. However, for most our expected to pick up in 2025. investments, the change will not signicantly impact Performance performance. As ever, prots and losses will (for As described in more detail in the Investment the most part) be determined by the success of Manager’s report, this has been a third year of management teams as they seek to develop and then dicult performance. After notable rallies in UK small commercialise new products and services. companies (including those on AIM) in late 2023 and After a period of improving economic activity, the the early summer of 2024, the tone in the market economy notably softened through the summer with changed in late May with the calling of the UK General economic indicators and news ow clearly signalling Election. The nal quarter was a dicult one for that we were working our way through a soft patch. companies on AIM, in particular those favoured by Falls in business and consumer condence ahead ### 4 investors looking for Business Property (IHT) Relief or Investments where investors had accumulated signicant gains. The Investment Manager invested £9.2million into Trading volumes on AIM increased by 99% in the seven Qualifying Companies during the period. The 3months to 30September 2024 when compared to fair value of Qualifying Investments at 30September the same period in 2023 as many investors chose to 2024 was £82.8million (56.0% of NAV) invested in exit the market. This selling pressure weighed on our (2) 55 AIM companies and 8 unquoted companies. At portfolio of AIM investments in the nal quarter of the year end, the fair value of non-qualifying equities, the nancial year and, as a result, we are disappointed the IFSL Marlborough UK Micro-Cap Growth Fund to report small losses across the year from that and the IFSL Marlborough Special Situations Fund element of the portfolio. There was also a slight were £12.0million (8.1% of NAV), £10.4million (7.0% downward adjustment to the value of the qualifying of NAV) and £9.4million (6.3% of NAV) respectively, investments held in private companies; however, with most of the non-qualifying equities listed within this was not a signicant factor in performance more the FTSE350 and oering good levels of liquidity broadly. The portfolio of investments in private should the need arise. £19.1million (12.9% of NAV) companies is quite heavily skewed towards the UK was held in short-dated investment grade corporate consumer discretionary sector, where peer group bonds, £0.7million (0.4% of NAV) was invested in valuations remain low. VanEck Gold Miners UCITS exchange traded fund (3) | At 30September 2024, the NAV per share was | | and £13.7million | (9.3% of NAV) held in cash at the | | --- | --- | --- | --- | | 40.55pence which, after adjusting for the dividends | | period end (including £8.8m held with the Custodian). | | | paid in the year of 4.00pence, gives a NAV total | | Further information can be found in the Investment | | | | (1) | Manager’s report. | | | return for the year of -3.86% | which compares | | | with +3.90% in the FTSE AIM All-Share Index Total Dividend Return (calculated on a dividends Index reinvested The Directors continue to maintain their policy of basis). The Directors consider this to be the most targeting a tax free dividend yield equivalent to 5% of appropriate benchmark from a Shareholder’s the year end NAV per share (see page 24 for the full perspective, however, due to the range of assets held policy). within the investment portfolio and the investment restrictions placed on a VCT it is not wholly In the 12-month period to 30September 2024, comparable. the Company paid dividends totalling 4.00pence (2023:5.00pence). A nal dividend of 1.50pence The earnings per share total return for the year was (2022:2.00pence) in respect of the 2023 nancial a loss of 1.86pence (comprising a revenue prot year was paid on 15February 2024 and an interim of 0.20pence and a capital loss of 2.06pence). dividend of 1 penny along with a special dividend of Revenue income increased by 8.9% to £2.9m 1.50pence (2023:1 penny) was paid on 26July 2024. as a result of a full-year contribution from the The payment of the special dividend reected the non-qualifying investment grade corporate bonds, receipt of proceeds from the sale of Abcamplc and unit trust accumulations and bank interest. There Instemplc. was a reduction in the interest accrued on loan noteinstruments after the Investment Manager A nal dividend of 1.25pence is proposed (acting on behalf of the VCT) agreed to convert some (2023:1.50pence) which, subject to Shareholder of the outstanding Kidly loan notesand reduce the approval at the forthcoming AGM, will be paid on balance of accrued interest in exchange for new 14February2025 to ordinary Shareholders on the preference shares in Kidly as part of a renancing register on 3January2025. A special dividend of plan. Income received into the revenue account 1.50pence per share has been approved by the exceeded expenses, resulting in a revenue prot for Board. The distribution will return to Shareholders the year of 0.20pence per share (FY23:0.27pence the proceeds from various exits and disposals. The per share). special dividend will be paid together with the nal dividend on 14February 2025. The share price decreased from 43.00pence to 39.00pence over the reporting period which, after adjusting for dividends paid of 4.00pence per share, (1) gives a share price total return of nil . (1) Alternative performance measure denitions and illustrations can be found on pages 92 to 93. (2) Excluding companies in administration or at risk of administration with zero value. (3) Net of prepayments and accruals. ### 5 ## Dividend re-investment scheme (“DRIS”) Shareholders may elect to reinvest their dividend by subscribing for new shares in the Company. Further information can be found in the Shareholder Information section on pages 98 to 99. On 15 February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 26 January 2024, to shareholders who elected to receive shares as an alternative to the final dividend for the year ended 30 September 2023 announced on 19 December 2023. On 26 July 2024, 2,235,192 ordinary shares were allotted at a price of 42.49pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 5 July 2024, to Shareholders who elected to receive shares as an alternative to the interim and special dividend for the year ended 30 September 2024. ## Share buybacks To maintain compliance with the discount control and management of share liquidity policy, the Company purchased through share buybacks 10,657,350 ordinary shares (nominal value £106,574) during the 2024 financial year at a cost of £4,472,418 (average price: 41.97pence per share). As at 17 December 2024, a further 3,559,262 shares have been repurchased post the year end at a cost of £1,361,156 (average price: 38.24pence per share). ## Share price discount The Company aims to improve liquidity and to maintain a discount of approximately 5 per cent. to the last published NAV per share (as measured against the mid-price) by making secondary market purchases of its shares in accordance with parameters set by the Board (see page 24 for the full policy). We continued to operate the discount control and management of share liquidity policy effectively during the period. As at 30 September 2024, the Company had one and five year average share price discounts of 5.46% (1) and 5.79% (2) respectively. The Company’s share price was trading at a discount of 3.82% (1) as at 30 September 2024 compared to a discount of 7.21% (1) as at 30 September 2023, this being calculated using the closing mid-price of the Company’s shares on 30 September 2024 as a percentage of the year end NAV per share, as published on 10 October 2024. As at 17 December 2024, the discount to NAV was 4.69% of the last published NAV per share. ## Offer for subscription The Directors of the Company announced on 7 September 2023 the launch of an offer for subscription for shares to raise up to £20 million, together with an over-allotment facility of up to a further £20 million. On 22 March 2024, the Company announced it had received valid applications of approximately £20 million. The Board decided to utilise the over-allotment facility only to the extent that valid applications under the offer were received by 5pm on 22 March 2024. The offer closed on 22 March 2024 at 5pm. The offer resulted in gross funds being received of £20.3 million and the issue of 44.5 million shares. ## New offer for subscription The Directors of the Company announced on 9 October 2024 the launch of a new 2024/2025 offer for subscription for shares to raise up to £20 million. The offer was approved by shareholders of the Company at a general meeting on 12 November 2024. By 17 December 2024, the Company had allotted 5.9 million shares raising gross proceeds of £2.4 million. As at the date of this document, the Company has received valid applications for a further £0.2 million. ## Cost efficiency The Board reviews costs incurred by the Company on a regular basis and is focused on maintaining a competitive OCR. The year end OCR was 2.43% (1) (FY23:2.24%) when calculated in accordance with the Association of Investment Companies’ (“AIC”) “Ongoing Charges” methodology. The increase in the OCR is principally driven by the fall in the average net assets across the year that followed the drop in the NAV per share and the payment of special dividends. Other material factors include increases in some of the fixed costs of the Company such as the administration, auditor and company secretarial fees, and the increased investment in the IFSL Marlborough UK Micro-Cap Growth Fund and the IFSL Marlborough Special Situations Funds. The Ongoing Charges methodology divides ongoing expenses by average net assets. (1) Alternative performance measure definitions and illustrations can be found on pages 92 to 93. 6 ## Board remuneration Following a review of Board remuneration, and taking into account peer group analysis and inflation, the Board has agreed to increase its remuneration by 3.2%, effective from 1 October 2024. The annual remuneration of the Chair will increase to £42,500, the independent non-executive directors to £33,000 and the non-independent non-executive director, Oliver Bedford, to £30,500. An additional fee of £1,500 will continue to be paid to the Chair of the MSPEC. The Chair of the Audit Committee will continue to receive an additional fee of £3,000. ## Annual General Meeting Shareholders are invited to attend the Company's AGM to be held at 12.30pm on 6 February 2025 at 88 Wood Street, London, EC2V7QR. The AGM notice is set out on pages 101 to 105. Those Shareholders who are unable to attend the AGM in person are encouraged to raise any questions in advance with the Company Secretary at HHV.CoSec@jtcgroup.com. The deadline for the advance submission of questions is 5.00pm on 30 January 2025. Answers will be published on the Company's website on 6 February 2025. Angela Henderson has notified the Board of her intention not to seek re-election as an Independent Non-Executive Director of the Company at the forthcoming AGM. I wish to take this opportunity to thank Angela for her valuable contribution over the years. The Company has decided that, due to the current size of the Board, there is no intention to appoint an additional Non-Executive Director at the present time. ## Shareholder engagement Shareholder engagement is given a high priority by the Board. The Company provides a significant amount of information, including recorded content, about its activities and performance through its website (www.hargreaveaimvcts.co.uk). The website also allows Shareholders to request (by email) updates on Shareholder events, the performance of the fund (interim management statements, fact sheets and video updates) and information on the Company's fundraising activities. Reflecting our wish to improve the flow of information to our Shareholders whilst simultaneously reducing costs and waste, we launched a major drive to upgrade and expand our database of Shareholders who opt in for email and digital communications. Please do register your consent with us through the website. Whilst the Board strongly encourages Shareholders to make use of everything the website has to offer, the Directors recognise that it is not for everyone. Should you prefer, you can of course continue to communicate with the Chair, any other member of the Board or the Investment Manager by writing to the Company, for the attention of the Company Secretary at the address set out on page 100 of this document or by email to HHV.CoSec@jtcgroup.com. The Board also wants to provide Shareholders with regular opportunities to meet directly with the Directors and the CGAM VCT investment management team. As a result, the Company held four in-person events (including the 2024 Annual General Meeting) and a webinar in the 12 months to 30 September 2024. The first of these was our annual Shareholder event on 28 November 2024, once again held at Everyman Cinema Broadgate, City of London. The event included a presentation by the Investment Manager covering the 12 months to 30 September 2024, along with presentations, pre-recorded interviews and a panel discussion with several guest speakers and a number of portfolio companies. The event concluded with the screening of a feature film. Summary recordings of the Investment Manager's presentations are available to view on the Company's website (www.hargreaveaimvcts.co.uk). In the new financial year, we expect to hold 3 in-person events (including the Annual General Meeting) and two webinars. The next Shareholder events include the forthcoming AGM to be held at the Investment Manager's offices at 88 Wood Street, London, EC2V7QR at 12.30pm on 6 February 2025 and a separate Shareholder webinar at 4.30pm on Monday 10 February 2025. Shareholders are asked to register their interest in attending Shareholder events through the Company's website (www.hargreaveaimvcts.co.uk) or by emailing aimvct@canaccord.com. ## Electronic communications and digital dividends As ever, we are asking Shareholders to opt into electronic communications and update their dividend payment preference from cheque to bank transfer. With this in mind, we intend to bring to a close the use of bank cheques for the payment of dividends. The last dividend payment by bank cheque will be in July 2025. Thereafter, all future dividends will be paid by bank transfer. We are therefore asking all Shareholders currently receiving dividends by bank 7 cheque to provide their bank account details ahead of the payment of the final dividend in respect of the year to 30 September 2025, due in February 2026. Switching to the digital delivery of Shareholder communications and dividend distributions is more cost efficient, secure and faster whilst also helping to reduce our environmental footprint. The Company no longer prints and distributes interim reports to Shareholders. The interim results continue to be available for download on the Company's website (www.hargreaveaimvcts.co.uk) and a summary of the results are published via a Regulatory Information Service on the London Stock Exchange. Where necessary, the Administrator can produce and send out a hard copy. Shareholders are also encouraged to make use of the shareview portal operated by the Registrar, which can be used to monitor their investment, review their transaction history, see information on dividend payments and update their communication preferences. ### **Electronic voting** Electronic proxy voting is available for Shareholders to register the appointment of a proxy and voting instructions for any general meeting of the Company once notice has been given. This service assists the Company to make further printing and production cost savings, reduce our environmental footprint and streamline the voting process for investors. ### **Regulatory update** There were no major changes to VCT legislation during the period under review. Through the Finance Act 2024, the Government extended the sunset clause for the VCT scheme from 5 April 2025 to 5 April 2035, allowing investors to claim income tax relief for subscriptions for new VCT shares for a further 10 years. The Treasury Order was laid before Parliament on 3 September 2024, meaning the sunset clause has now been officially extended to 5 April 2035. ### **Administration agreement** With effect from 1 October 2024, the administration agreement was novated from CGWL to CGAM. Under the terms of the novation agreement, the administration fees paid by the Company were unchanged at £250,000 (plus VAT). Notwithstanding the novation, CGWL will continue to receive a fee of £30,000 per annum in relation to its appointment as the Custodian. Any future initial or trail commissions paid to Financial Intermediaries will be paid by CGAM. ### **Consumer duty** The Consumer Duty regulation is designed to improve the standard of care provided by firms that are involved in the manufacture or supply of products and services to retail clients. As the Company is not regulated by the FCA, it falls outside of the Consumer Duty regulation. However, CGAM and CGWL are regulated companies and were in scope, respectively as the designated manufacturer and distributor of the Company during the financial year. In its capacity as manufacturer, CGAM has conducted a fair value assessment and a target market assessment. Having reviewed both reports, the Board is satisfied that CGAM and CGWL continued to comply with their obligations throughout the period. As a consequence of the novation of the administration agreement, CGAM became both the designated manufacturer and distributor of the Company with effect from 1 October 2024. ### **VCT status** I am pleased to report that the Company continues to perform well against the requirements of the VCT Rules and at the period end, the investment test was 100% (2023: 91.65%) against an 80% requirement when measured using HMRC's methodology. The increase in the investment test percentage reflects progress made in deploying capital into Qualifying Companies and the return of capital to Shareholders through the payment of a 1.50 pence per share special dividend on 26 July 2024 following receipt of proceeds from the sale of Abcam plc and Instem plc. The Company satisfied all other tests relevant to its status as a Venture Capital Trust. Further information on these tests can be found on page 25. ### **Key information document ("KID")** In accordance with the PRIIPs regulations, the Company's KID is published on the Company's website at www.hargreaveaimvcts.co.uk/document-library/. ### **Risk review** The Board has reviewed the risks facing the Company. Further detail can be found in the principal and emerging risks and uncertainties section on pages 21 to 22. ### **Outlook** Once again, we have endured a difficult start to the financial year, albeit for very different reasons. The Government's unhelpfully stark messaging in the run up to the budget has weighed on economic activity 8 with GDP data and PMI surveys both highlighting a notable softening in UK economy through the late Summer and Autumn. Measures of UK consumer and business condence both dipped, suggesting that households and companies were becoming increasingly cautious ahead of and subsequent to the Autumn 2024 Budget. However, in large part due to the very signicant increase in public spending expected next year, we expect to see economic activity pick up as we head into next year. The Oce for Budget Responsibility forecasts GDP to increase from 1.1% in 2024 to 2.0%in 2025. The FTSE AIM All-Share Index has been noticeably weak post period end with potential changes to Business Property Relief weighing heavily on the index ahead of the Autumn 2024 Budget. In the end, when viewed through the narrow lens that we apply to the VCT, the budget was substantially better than many had feared. That is not to downplay the pain that many households and businesses will feel. However, the changes to National Insurance Contributions (“NICs”), the source of much post- budget commentary, is unlikely to be a major factor in shaping the outcomes for many of our investments with the impact muted by the spread of investments we hold. We are pleased to report that deal ow has started to improve. Post period end, we have invested £1.8million across 3 qualifying investments. Weare active on a large number of deals across both public and private markets, including a limited number of IPOs. It is too early to say that the tide has turned decisively but we can see clear evidence that green shoots might nally start toemerge. David Brock Chair 17 December2024 ### 9 # The Company and its business model The Company was incorporated and registered in England and Wales on 16 August 2004 under the Companies Act 1985, registered number 05206425. The Company has been approved as a Venture Capital Trust by HMRC under Section 259 of the Income Taxes Act 2007. The shares of the Company were first admitted to the Official List of the UK Listing Authority and trading on the London Stock Exchange on 29 October 2004 and can be found under the TIDM code “HHV”. The Company is premium listed. In common with many other VCTs, the Company revoked its status as an investment company, as defined in Section 266 of the Companies Act 1985, on 23 May 2006 to facilitate the payment of dividends out of capital profits. The Company’s principal activity is to invest in a diversified portfolio of qualifying small UK based companies, primarily trading on AIM, with a view to generating capital returns and income from its portfolio and to make distributions from capital and income to Shareholders whilst maintaining its status as a VCT. The Company is registered as a small UK AIFM with a Board comprising six non-executive directors, five of whom are independent. CGAM acts as Investment Manager and (from 1 October 2024) Administrator, whilst CGWL acts as Custodian (and, until 30 September 2024, the Administrator) of the Company. JTC (UK) Limited is engaged as the Company Secretary. The Board has overall responsibility for the Company’s affairs including the determination of its investment policy. However, the Board exercises these responsibilities through delegation to the Investment Manager, the Administrator, the Custodian and the Company Secretary as it considers appropriate. The Directors have managed and continue to manage the Company’s affairs in such a manner as to comply with Section 259 of the Income Taxes Act 2007. ![img-0.jpeg](img-0.jpeg) 10 ## Investment objectives, policy and strategy Investment objectives The value of funds held in bank deposits will vary The investment objectives of the Company are to between nil and 30per cent. of the net assets of the generate capital gains and income from its portfolio Company. and to make distributions from capital or income Investment controls to Shareholders whilst maintaining its status as a The Company may make co-investments in investee Venture Capital Trust. companies alongside other funds, including other Investment policy funds managed by the Investment Manager. The Company intends to achieve its investment Other than bank deposits, no individual investment objectives by making Qualifying Investments in shall exceed 10per cent. of the Company’s net assets companies listed on AIM, private companies and at the time of investment. companies listed on the AQSE Growth Market, as well as Non-Qualifying Investments as allowed by the VCT Borrowings Rules. The Articles permit the Company to borrow up to 15per cent. of its adjusted share capital and Qualifying Investments reserves (as dened in the Articles). However, it The Investment Manager will maintain a diversied is not anticipated that the Company will have any portfolio of Qualifying Investments which may borrowings in place and the Directors do not intend to include equities and xed income securities as utilise this authority. permitted by the VCT Rules. Investments will To the extent that any future changes to the primarily be made in companies listed on AIM but Company’s investment policy are considered to may also include private companies that meet the be material, Shareholder consent to such changes Investment Manager’s criteria and companies listed will be sought. Such consent applies to the formal on the AQSE Growth Market. These small companies investment policy described above and not the have a permanent establishment in the UK and, whilst investment process set out below. of high risk, will have the potential for signicant capital appreciation. Investment process and strategy To maintain its status as a VCT, the Company must The Investment Manager follows a stock specic have 80per cent. by value, as measured by the investment approach based on fundamental analysis VCT Rules,of all of its investments in Qualifying of the investee company. Investments throughout accounting periods of the The Investment Manager’s fund management team VCT beginning no later than three years after the has signicant reach into the market and meets date on which those shares are issued. To provide with large numbers of companies each week. These some protection against an inadvertent breach of meetings provide insight into investee companies, this rule, the Investment Manager targets a threshold their end markets, products and services, and of approximately 85per cent. competition. Investments are monitored closely and the Investment Manager usually meets or engages Non-Qualifying Investments with their senior leadership team at least twice each Non-Qualifying Investments must be permitted year. Where appropriate, the Company may co-invest by the VCT Rulesand may include equities and alongside other funds managed by the Investment exchange traded funds listed on the main market of Manager. the London Stock Exchange, xed income securities, The key selection criteria used in deciding which bank deposits that are readily realisable, the IFSL investments to make include, inter alia: Marlborough Special Situations Fund and the IFSL ● the strength and depth of the management Marlborough UK Micro-Cap Growth Fund. Subject team; to the investment controls below, the allocation to each of these investment classes will vary to ● the business strategy; reect the Investment Manager’s view of the ● a prudent approach to nancial management market environment and the deployment of funds and forecasting; into Qualifying Companies. The market value of ● a strong balance sheet; the Non-Qualifying Investments (excluding bank ● prot margins, cash ows and the working deposits) will vary between nil and 50per cent. of the capital cycle; net assets of the Company. ### 11 ● barriers to entry and the competitive landscape; The use of the IFSL Marlborough Special Situations and Fund and the IFSL Marlborough UK Micro-Cap Fund ● enables the Company to maintain its exposure to the balance of risk and reward over the medium small UK companies whilst the Investment Manager and long term. identies opportunities to invest the proceeds of Qualifying Investments fundraisings into Qualifying Companies. Investments are made to support the growth The Investment Manager may use certain exchange and development of a Qualifying Company. The traded funds listed on the Main Market of the London Investment Manager will maintain a diversied Stock Exchange to gain exposure to asset classes not portfolio that balances opportunity with risk and otherwise accessible to the Company. liquidity. Qualifying Investments will primarily be made in companies listed on AIM but may also include Environmental, social and governance considerations private companies and companies listed on the AQSE Growth Market. Seed funding is rarely provided and Approach only when the senior leadership team includes proven The Company regards the development of a clearly business leaders known to the Investment Manager. dened and integrated ESG management system as Working with advisers, the Investment Manager will an important pillar for the long-term success of its screen opportunities, often meeting management business, as well as for its investee companies. teams several times prior to investment to gain a The Investment Manager believes that companies detailed understanding of the company. Investments with strong governance, durable business models and will be sized to reect the risk and opportunity balanced workforces are more likely to create value over the medium and long term. In many cases, over the long term whilst reducing investment risk, the Investment Manager will provide further beneting the wider UK economy and society and funding as the need arises and the investment generating positive Shareholder returns. matures. When investing in private companies, the Investment Manager will shape the investment to ESG in the investment process meet the investee company’s needs whilst balancing Holding meaningful stakes in investee companies the potential for capital appreciation with risk provides the Investment Manager with the management. opportunity and responsibility to positively inuence Investments will be held for the long term unless investee company behaviour, both at the point there is a material adverse change, evidence of of investment and during the time in which the structural weakness, or poor governance and Company is a shareholder. leadership. Partial realisations may be made where necessary to balance the portfolio or, on occasion, to Due diligence capitalise on signicant mispricing within the stock The Investment Manager assesses ESG factors market. across the portfolio. For Qualifying Companies, the Investment Manager will use the information Non-Qualifying Investments provided to develop, over time, an individualised The Investment Manager’s VCT team works ESG risk map to identify issues and track behavioural closely with the Investment Manager’s wider fund themes. The Investment Manager regularly engages management team to deliver the investment with senior management teams and boards to strategy when making Non-Qualifying Investments, identify and raise issues of note, provide a forum as permitted by the VCT Rules. The Investment for positive feedback and promote change where Manager will vary the exposure to the available asset necessary. classes to reect its view of the equity markets, balancing the potential for capital appreciation with Engagement, exclusions and divestment policies risk management, liquidity and income. As part of its investment strategy, the Company has adopted policies covering exclusions and divestment The Non-Qualifying Investments will typically to describe behaviours that fall outside of the include a focused portfolio of direct investments in Company’s expectations of investee companies. The companies listed on the main market of the London Investment Manager has adopted an engagement Stock Exchange. The portfolio will mix long term policy to create a clear framework that denes how it structural growth with more tactical investment will interact with investee companies. to exploit short term mispricing within the market. ### 12 The Investment Manager The Investment Manager adheres to its own ESG investment and stewardship policies. These include an ESG Policy, an Engagement Policy, a Conicts of Interest Policy and a Stewardship Policy that, together with the investment mandate and the Company’s ESG approach, inform the Company’s approach. CGAM is a signatory of the United Nations Principles of Responsible Investment and HM Treasury’s Women in Finance Charter. Risk management The structure of the Company’s investment portfolio and its investment strategy has been developed to mitigate risk where possible. Key risk mitigation strategies are as follows: ● The Company has a broad portfolio of investments to reduce stock specic risk; ● Flexible allocations to non-qualifying equities, exchange traded funds listed on the Main Market of the London Stock Exchange, xed income securities, bank deposits that are readily realisable, the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund allow the Investment Manager to adjust portfolio risk without compromising liquidity; ● Regular meetings with investee companies aid the close monitoring of investments to identify potential risks and allow corrective action where possible; and ● Regular Board meetings and dialogue with the Directors, along with policies to control conicts of interest and co-investment with the IFSL Marlborough fund mandates support strong governance. Further information can be found on page 21. ### 13 # Key performance indicators The Directors consider the following KPIs to assess whether the Company is achieving its strategic objectives. The Directors believe these measures help Shareholders assess how effectively the Company is applying its investment policy and are satisfied the results give a fair indication of whether the Company is achieving its investment objectives and policy. The KPIs are established industry measures. Further commentary on the performance of these KPIs has been provided in the Chair's statement and Investment Manager's report on pages 4 to 9 and 28 to 31 respectively. ## 1 NAV and share price total returns The Board monitors NAV and share price total return to assess how the Company is meeting its objective of generating capital gains and income from its portfolio and making distributions to Shareholders. The NAV per share decreased from 46.34% to 40.55% resulting in a loss to ordinary Shareholders of -1.79% per share (-3.86%) (1) after adjusting for dividends paid in the year. ![img-1.jpeg](img-1.jpeg) The Board considers peer group and benchmark comparative performance. Due to the very low number of AIM VCTs, the Board reviews performance against the generalist VCTs as well as the AIM VCTs to provide a broader peer group for comparison purposes. Performance is also measured against the FTSE AIM All-Share Index Total Return. With 48.3% of the NAV in companies listed on AIM, the Directors consider this to be the most appropriate benchmark. However, HMRC derived investment restrictions and investments in private companies, main market listed companies and bonds mean that the index is not a wholly comparable benchmark for performance. | Rolling Returns to end Sep 2024 | 1Y | 3y | 5y | 15y | | --- | --- | --- | --- | --- | | NAV total return (1) | -3.86% | -44.02% | -7.08% | 8.33% | | Share price total return | 0.00% | -41.24% | -3.68% | 13.18% | | NAV total return (dividends reinvested) (2) | -4.21% | -48.03% | -16.53% | -3.23% | | Share price total return (dividends reinvested) (2) | -0.18% | -46.69% | -12.94% | 2.41% | | FTSE AIM All-Share Index Total Return | 3.90% | -39.74% | -9.13% | 13.40% | Source: CGAM (1) Reflecting the significant return of capital through regular and special dividends in recent years, which materially exceeds the dividends paid by the FTSE AIM All-Share Index, the Board is of the view that it is more accurate to report performance against the benchmark on a (simple) total return basis rather than on a dividends re-invested basis. The Board also notes that approximately 90% of Shareholders do not participate in the Company's DRIS scheme, making the simple total return (without dividends reinvested) more effective of Shareholder returns as experienced by the vast majority of Shareholders. The definition and illustration of this alternative performance measure can be found on pages 92 to 93. (2) The NAV total return (dividends reinvested) and share price total return (dividends reinvested) measures have been included to improve comparability with the FTSE AIM All-Share Index Total Return which is also calculated on that basis. The definitions and illustrations of these alternative performance measures can be found on pages 92 to 93. Reflecting the difficult market conditions that continued to weigh on the NAV through the financial year, and in common with the AIM VCT peer group, the Company reported a modest reduction in the NAV per share. The NAV total return fell behind the benchmark over one and three years; however, it remains ahead of the benchmark 14 over five years but behind the average of the AIM VCT peer group over the same time horizons. The steep falls in valuations of companies listed on AIM, which have heavily impacted the performance of the Company and its AIM VCT peers, have not been mirrored in the Generalist VCT sector, which has reported an average gain of +3.47% over the period under review (source: Morningstar). The divergence of performance across the two peer groups is particularly notable across the three years since the start of the bear market with the AIM VCT sector returning an average loss of -42.9% against the average gain within the Generalist VCT sector of +3.35%. AIM has fallen by -39.7% over the same three-year period. It is difficult to account for the strongly divergent performance although the possible use of preferred investment structures not accessible to investors in public companies may account for some of the difference. The steady sell-off of investments on AIM ahead of the 2024 Autumn Budget will have also been a factor. Further detailed information on peer group performance is available through Morningstar (https://www.morningstar.co.uk) and the AIC (https://www.theaic.co.uk/aic/2nd-compare-investment-companies). ## 2. Share price discount to NAV per share The Company uses secondary market purchases of its shares to improve the liquidity in its shares and support the discount. The discount to NAV per share is an important influence on a selling Shareholder's eventual return. The Company aims to maintain a discount of approximately 5 per cent. to the last published NAV per share (as measured against the mid-price). The Company's shares traded at a discount of 3.82% (1) as at 30 September 2024 (2023: 7.21% (1)) when calculated with reference to the 30 September 2024 NAV per share. The one and five-year average share price discounts were 5.46% (1) and 5.79 (1) respectively. The Company's shares are priced against the last published NAV per share with the market typically adjusting the price to reflect the NAV after its publication. In line with the Company's valuation policy, the Company aims to publish the quarter end NAV per share within seven business days of the period end to allow time for the Investment Manager and Board to review and agree the valuation of the private companies held within the investment portfolio. The Company's share price on 30 September 2024 reflected the last published NAV per share prior to the year end, which was released on 10 October 2024. The 30 September 2024 NAV was reported on 10 October 2024, following the review of the valuations of the private companies. As at 17 December 2024, the discount to NAV was 4.69% of the last published NAV per share. ![img-2.jpeg](img-2.jpeg) ## 3. Ongoing charges ratio The ongoing charges of the Company were 2.43% (1) (2023: 2.24% (1)) of the average net assets of the Company during the financial year to 30 September 2024. The increase in the OCR is principally driven by the fall in the average net assets across the year that followed the drop in the NAV per share and the payment of special dividends. Other material factors include increases in some of the fixed costs of the Company such as administration, auditor and company secretarial fees, along with (1) Alternative performance measure definitions and illustrations can be found on pages 92 to 93. 15 the increased investment in the IFSL Marlborough UK Micro-Cap Growth Fund and the IFSL Marlborough Special Situations Funds. The Ongoing Charges methodology divides ongoing expenses by average net assets. The Company's OCR remains competitive against the wider VCT industry but marginally higher than the other AIM VCTs. This ratio is calculated using the AIC's "Ongoing Charges" methodology and, although based on historical information, it provides Shareholders with an indication of the likely future cost of managing the fund. Cost control and efficiency continues to be a key focus for the Board. Although the OCR increased within the year, the Board is pleased to report that the Company's expenses incurred within the year were below budget. #### 4. Dividends per share The Company's policy is to target a tax free dividend yield equivalent to 5% of the year end NAV per share. The Board remains committed to maintaining a steady flow of dividend distributions to Shareholders. A total of 4.00pence per share (2023: 5.00pence) of dividends was paid during the year, comprising a final dividend of 1.50pence in respect of the previous financial year (2022: 2.00pence) paid on 15 February 2024, a special dividend of 1.50pence per share paid on 26 July 2024 and an interim dividend of 1penny (2023: 1penny) also paid on 26 July 2024. A final dividend of 1.25pence per share will be proposed at the forthcoming AGM. If approved by Shareholders, the payment of the interim, final and special dividends in respect of the financial year to 30 September 2024 would represent a distribution to Shareholders of 9.2% of the 30 September 2024 NAV per share. A special dividend of 1.50pence per share has been approved by the Board. The distribution will return to Shareholders proceeds from various exits and disposals. The special dividend will be paid together with the final dividend on 14 February 2025. The below table demonstrates how the Board has been able to consistently pay dividends in line with the 5% target and the Company's dividend policy. | Dividends paid payable by financial year | | | | | | --- | --- | --- | --- | --- | | Year | Year end NAV | | Yield | Additional information | | | per share | Dividends | | | | 2010/11 | 61.14 | 4.00 | 6.5% | | | 2011/12 | 61.35 | 3.25 | 5.3% | | | 2012/13 | 71.87 | 3.75 | 5.2% | | | 2013/14 | 80.31 | 4.25 | 5.3% | | | 2014/15 | 74.64 | 4.00 | 5.4% | | | 2015/16 | 75.93 | 4.00 | 5.3% | | | 2016/17 | 80.82 | 4.00 | 4.9% | | | 2017/18 | 87.59 | 5.40 | 6.2% | Including special dividend of 1 penny. | | 2018/19 | 70.60 | 3.75 | 5.3% | | | 2019/20 | 73.66 | 5.40 | 7.3% | Including a special dividend of 1.75pence. | | 2020/21 | 100.39 | 7.40 | 7.4% | Including a special dividend of 2.50pence. | | 2021/22 | 60.19 | 3.00 | 5.0% | | | 2022/23 | 46.34 | 4.50 | 9.7% | Including a special dividend of 2.00pence. | | 2023/24 | 40.55 | 3.75 | 9.2% | Including a special dividend of 1.50pence and proposed final dividend of 1.25pence. | #### 5. Compliance with VCT Rules A VCT must be approved by HMRC at all times and, in order to retain its status, the Company must meet a number of tests as set out by the VCT Rules, a summary of which can be found on page 25. Throughout the year ended 30 September 2024 the Company continued to meet these tests. The investment test increased from 91.65% to 100% in the financial year. The increase in the investment test percentage reflects progress made in deploying capital into Qualifying Companies and the return of capital to Shareholders through the payment of a 1.50pence per share special dividend on 26 July 2024 following receipt of proceeds from the sale of Abcam plc and Instam plc. The investment test remains comfortably ahead of the 80% threshold that applies to the Company and ahead of the target of 85% as set out in the Company's investment policy. The Company invested £9.2 million into seven Qualifying Companies, three of which were investments into new Qualifying Companies. The Board believes that the Company will continue to meet the HMRC defined investment test and other qualifying criteria on an ongoing basis. For further details please refer to the Investment Manager's report on pages 28 to 31. 16 ## Section 172 statement Under Section172, the Directors have a duty to cost than the event in Manchester, the Investment promote the success of the Company for the benet Manager plans to hold two in-person events in of its Shareholders as a whole, and in doing so to London (one at the Investment Manager’s oce and have regard to a number of matters including the one at Everyman Cinema Broadgate, London) and interests of its employees, suppliers and customers two webinars over the course of the 2025 nancial and the impact of the Company’s operations on the year. community and the environment. Additional Shareholder updates, CEO interviews This section sets out how the Directors meet their and other economic updates were produced with obligations under Section172. It provides a summary members of the Investment Manager’s team and of how the Directors build and maintain strong have been posted on the Company’s website. relationships with the Company’s key stakeholders, During the year, the Company also provided how they understand their interests and concerns Shareholders with regular reports on performance, and how the strength of these relationships is investment activity, governance, and compliance contributing to the Company’s success. Within the with HMRC legislation through weekly NAV reporting year, the Board continued to engage with announcements, monthly factsheets, quarterly its key stakeholders. interim management statements, the interim report In 2023, the Board reviewed and identied its key and the audited annual report. These reports, stakeholders, being shareholders, the Investment together with further background information Manager, investee companies, key suppliers and regarding the Company, can be found on the professional advisers, distributors, and government Company’s website. agencies, regulators and industry associations. These In addition, Shareholders had several channels stakeholders did not change during the nancial through which they could ask questions of, or raise period. The Company continues not to have any matters with, the Investment Manager, the Board, employees or customers. the Administrator, the Company Secretary or the This Section172 statement should be read with Registrar (details can be found on the Company’s the other contents of the Strategic Report on website). Enquiries were addressed internally or via pages3to38. escalation to the Board, as necessary. The Board continued last year’s focus to make the Purpose Company’s processes more ecient, minimise Hargreave Hale AIM VCT plc aims to support UK costs for Shareholders and reduce its environmental investors to full their longer-term nancial goals footprint associated with the production of the through the eective delivery of its investment annual reports, circulars, and prospectuses. Post objectives, namely by providing nancial capital year end, the Company ran a campaign (‘more to support growing, innovative businesses across informed, less waste’) to encourage Shareholders theUK. to elect (through the website) to receive electronic communications from the Company. Currently, about Shareholders one third of Shareholders have signed up. The Board remains strongly committed to prioritising Shareholders and considers active Shareholder Key decisions: engagement as being central to its understanding ● close the 2023/2024 Oer for subscription of Shareholder interests and concerns, in order to having successfully raised £20.3m; ensure their continued support of and investment ● payment of dividends totalling fourpence per in the Company. As a result, the Board seeks to share; have an open, ongoing and positive dialogue with ● continue the share buy-back programme in Shareholders. support of the discount control policy and to Reecting Shareholder requests to increase improve liquidity in the Company’s shares; access for those unable to travel to London for ● increase Shareholder access to the Investment in-person events or attend during the working day, Manager and the Board; and the Investment Manager increased the number of Shareholder events to four, including a rst event ● run a campaign to improve the adoption of outside of London, two evening events and the rst digital communications. Shareholder webinar. With the Shareholder webinar reaching a wider audience at a substantially lower ### 17 Impacts: Impacts: ● support the delivery of the Company’s purpose, Through engagement with the Investment Manager, investment objectives and key policies as set the Board is able to: out in this report and elsewhere; ● oversee the execution of the Company’s key ● increase Shareholder engagement, policies; transparency, accountability and understanding; ● monitor progress with the deployment of capital and into qualifying companies; ● substantially reduce the costs and ● review the valuation of the Company’s environmental footprint. investments in unquoted assets; ● receive updates on the key drivers of Investment Manager performance; The Investment Manager is responsible for the ● monitor compliance with VCT Rulesand FCA successful delivery of the Company’s investment regulations, including the Consumer Duty; policy under a discretionary mandate. A transparent and open working relationship between the Board and ● receive updates on regulatory, governance and the Investment Manager is, therefore, fundamental to public aairs matters; and the successful operation of the Company. During the ● identify, monitor and (where applicable) mitigate year, the Board and its sub-committees maintained other risk factors that may impact the Company. close and frequent contact with the CGAM VCT fund management team. Oliver Bedford is a Board Investee companies member, the lead fund manager, and an employee of The Company’s performance is directly linked to the CGAM and a key link between the Company and the performance of its underlying investee companies. Investment Manager and the Administrator. He and Through the IMA, the Board has delegated the other representatives of the Investment Manager monitoring of its portfolio companies to the attended all Board meetings and sub-committee Investment Manager, which directly engages with meetings, where appropriate, thus ensuring a regular senior management teams and boards of investee and constructive dialogue on issues of a strategic and companies through meetings, updates, site visits and material nature. Less formal communications were through other diligence work. adopted for more operational issues or those that As a signicant shareholder in investee companies required the Board’s immediate attention. with a delegated authority to vote on shareholder The Board retains overall responsibility for the resolutions, the Investment Manager is able to Company’s portfolio of investments and risk engage with and positively inuence investee management. Throughout the reporting period, the company behaviour, both at the point of investment Board received detailed reports from the Investment and during the time in which the Company is a Manager, including commentary on portfolio shareholder. This allows the Investment Manager performance and positioning, which enabled the to identify and raise issues of note, provide a forum Directors to oversee the delivery of the Company’s for positive feedback, and promote change where investment policy and upon which it relied to make its necessary. key decisions. The Investment Manager has a strong record of Through the MSPEC, the Board undertakes an annual voting on shareholder resolutions on behalf of review of the Investment Manager. The most recent the Company. Within the year under review, the review was held on 12November2024 to cover the Investment Manager voted on more than 98% of the nancial year to 30September 2024. available resolutions. The Board believes that responsible investment, Key decisions: executed through constructive and appropriately ● retain CGAM as the Investment Manager; and calibrated engagement with investee companies, ● review the ESG features of the investment underpins the successful delivery of the investment process. policy over the long-term. During the reporting period, the Board received regular updates from the Investment Manager on its engagement with investee companies. The Board accompanied the ### 18 Investment Manager on site visits to two of the and technical factors, designs and implements the portfolio companies (Gousto and Science in Sport). Company’s policies and monitors compliance with its regulatory obligations. During the year, the Board Key decisions: and Investment Manager received quarterly in- ● delegate authority to vote on shareholder person updates and ad hoc advice, as appropriate, decisions to the Investment Manager. compliance status reports and annual training from the Company’s professional advisers. Impacts: During the year, the Board visited the Administrator Active engagement programmes create the forum in Blackpool and approved the transfer of the for: administration team from CGWL to CGAM and ● active monitoring of governance in investee related novation of the Administration Agreement. companies; ● Key decisions: promoting good corporate behaviours in ● retain CGWL as the Administrator (subsequently investee companies; and novated to CGAM); ● advocating for ESG-related initiatives where ● introduce a new Procurement Procedure for all they are seen to be value accretive or reducing risk. new third-party suppliers; ● refresh the Privacy Notice; Key suppliers and professional advisers ● retain Philip Hare & Associates LLP as the As the Company does not have any employees or Company’s tax adviser; and premises of its own, it depends on outsourcing its ● appoint Howard KennedyLLP as the Company’s operations to key third party suppliers and for those sponsor and legal adviser in advance of the suppliers to run ecient operations on its behalf. prospective 2024/25 Oer. Given this reliance, the Board seeks to have an open and constructive relationship with all service Impacts: providers. Through the review process, the MSPEC is able to: Responsibility for the management of the Company’s ● evolve policies to reect regulatory changes; key suppliers is led by the MSPEC, which meets ● monitor service level agreements; and bi-annually. Throughout the year, the Board received a comprehensive overview of the support ● review contracts to ensure they provide value functions provided by its service providers through for money to Shareholders. a combination of written reports and attendance at Specialist professional advice supports positive MSPEC meetings. In particular, the MSPEC reviewed compliance outcomes and informs decision making. information provided by key suppliers conrming that they appropriately manage cyber risks, data Distributors protection and business continuity programs, Working alongside the Investment Manager and together with reviewing information on their the Receiving Agent, the Company’s distributors governance structures, insurance cover, controls promote the Company to nancial intermediaries and culture. In addition, the Board approved a new and investors when the Company is raising funds for Procurement Procedure which included introducing investment through oers for subscription. Through standardised due diligence and risk assessments for the IMA and, where applicable, an Oer Agreement, engaging all new third-party suppliers. the Board delegates responsibility for this to the Following advice from the Company’s legal advisers, Investment Manager and Receiving Agent. the Board approved and refreshed the Company’s The Investment Manager maintained close Privacy Notice which sets out how the Company contact with key distributors throughout the year, processes personal information. The most up-to- provided in-person performance updates and date notice can be found on the Company’s website. listened to feedback. The Investment Manager The Board also reviewed the Company’s corporate reported this feedback to the Board, along with and operating policies as part of an annual review. any recommendations. The Board also received The Company operates within a complex legal, an update on the impact of compliance with the nancial, tax and regulatory environment. Engaging Consumer Duty principle. specialist, professional advisers provides the Board with appropriate support as it considers complex ### 19 Key decisions: ● review the implementation of Consumer Duty by CGAM and CGWL. Impacts: ● improved understanding of costs and value within the distribution chain; ● improved understanding of services provided by distributors; and ● provided more opportunities for feedback from Shareholders and their advisers. Government agencies, regulators and industry associations Governments, regulators, and industry associations determine legislation and shape the business and policy environment the Company operates in. The Board is committed to having an open, cooperative, and constructive relationship with regulators and Government agencies, supporting relevant industry associations, providing evidence to support the VCT scheme and engaging in policy reviews and initiatives to improve the operation of the scheme. The Company is a member of the AIC and the VCTA and attended events held by both bodies. Oliver Bedford is a member of the VCTA Policy Committee. The Company is also represented on the VCTA Marcomms Committee. In particular, representations were made through the AIC and VCTA to Government agencies to advocate for the extension of the ‘sunset clause’ to 2035 (now adopted into UK legislation). Key decisions: ● continue to actively engage with policymakers through memberships of industry associations. Impacts: Our involvement: ● assisted the industry in successfully achieving the extension of the VCT ‘sunset clause’ to 2035; and ● helped to maintain support for VCTs from within government departments, including HMRC and HMT, and industry associations. ### 20 ## Principal and emerging risks ## and uncertainties The Directors acknowledge that they are responsible for the eectiveness of the Company’s risk management and internal controls and periodically review the principal risks faced by the Company. The Board may full these responsibilities through delegation to CGAM and CGWL as it considers appropriate. The principal risks facing the Company, together with mitigating actions taken by the Board, are set out below: Risk Potential consequence How the Board mitigates risk Changes during the year | Venture Capital Trust approval | Loss of VCT approval could | To reduce this risk, the Board | No change. | | --- | --- | --- | --- | | risk. The Company operates in a | lead to the Company losing its | has appointed an Investment | | | complex regulatory environment | exemption from corporation tax | Manager with signicant | | | and faces a number of related | on capital gains, Shareholders | experience in the management | | | risks. A breach of Section259 of | losing their tax reliefs and, in | of venture capital trusts. The | | | the Income Taxes Act2007 could | certain circumstances, being | Investment Manager regularly | | | result in the disqualication of | required to repay the initial tax | provides the Board with written | | | the Company as a VCT. | relief on their investment. | and verbal reports. The Board | | also appointed Philip Hare& AssociatesLLP to monitor compliance with regulations and provide half-yearly compliance reports to the Board. | Investment risk. Many of the | Investment in poor quality | The Board has appointed the | No change. The UK economy | | --- | --- | --- | --- | | Company’s investments are held | companies could reduce the | Investment Manager which | is forecast to grow by 2.0% | | in small, high risk companies | capital and income return to | has signicant experience of | in 2025 (source:Oce for | | which are either listed on AIM or | Shareholders. Investments in | investing in small companies. The | Budget Responsibility). The | | privately held. | small companies are often illiquid | Investment Manager maintains | Bank of England is expected | | | and may be dicult to realise. | a broad portfolio of investments | to continue to reduce interest | | | | across a wide range of industries | rates. In both cases, this | | | | and sectors. Individual Qualifying | should improve consumer | | | | Investments rarely exceed 5% | and business condence and | | | | of net assets. The Investment | encourage investment into | | | | Manager holds regular company | growth. Osetting this, the | | | | meetings to monitor investments | Autumn Budget 2024 introduced | | | | and identify potential risk. The | a signicantly tighter scal | | | | VCT’s liquidity is monitored on a | policy that will increase the | | | | regular basis by the Investment | cost of employment, limit | | | | Manager and reported to the | private sector wage growth, | | | | Board quarterly and as necessary. | depress protability and reduce | investment by the private sector. Whilst changes to Business Property Relief may make AIM less attractive to investors seeking to mitigate Inheritance Tax, the Budget and the recent extension of Sunset Clause conrmed the Government’s support for two important groups of investors on AIM. | Compliance risk. The Company | Failure to comply with these | Board members have | No change. | | --- | --- | --- | --- | | is required to comply with | regulations could result in a | considerable experience of | | | the FCA UK Listing Rulesand | delisting of the Company’s | operating at senior levels within | | | the Disclosure Guidance | shares, nancial penalties, a | quoted businesses. They have | | | and Transparency Rules, the | qualied audit report and/or loss | access to a range of advisers | | | Companies Act 2006, Accounting | of Shareholder trust. | including solicitors, accountants | | | Standards, the General Data | | and other professional | | | Protection Regulation and other | | bodies and take advice when | | | legislation. The Company is also a | | appropriate. | | small registered UK AIFM and has CGWL provides compliance to comply with the requirements oversight to both the of the AIFM Directive. Administrator and the Investment Manager and reports to the Board on a quarterly basis. Operational risk and Failures could put the assets The Company has in place a No change. outsourcing. Failure in of the Company at risk or risk matrix and a set of internal the Investment Manager, result in reduced or inaccurate policies which are reviewed on Administrator, Custodian, information being passed to the a regular basis. It has written Company Secretary or other Board or Shareholders. agreements in place with its appointed third-party systems Quality standards may be third-party service providers. and controls or disruption to reduced through lack of The Board receives regular their respective businesses as understanding or loss of control. reports from the Investment a result of operational failure, Manager, Administrator and environmental hazards or cyber Custodian to provide assurance security attacks. that they operate appropriate control and oversight systems ### 21 Risk Potential consequence How the Board mitigates risk Changes during the year and have in place training and other defence measures to mitigate the risk of cyber attack. Additionally, the Board receives a control report from the Registrars on an annual basis. Where tasks are outsourced to other third parties, reputable rms are used and performance is reviewed periodically by the MSPEC. Key personnel risk. A change in Potential impact on investment The Board discusses key No change. the key personnel involved in the performance. personnel risk and resourcing management of the portfolio. with the Investment Manager periodically. To mitigate this risk, the VCT team within the Investment Manager has a large team comprising two fund managers, a portfolio manager, an investment analyst and a legal counsel. | Exogenous risks such as | Instability or changes arising | Regular dialogue with the | No change. | | --- | --- | --- | --- | | economic, political, geopolitical | from these risks could have an | Investment Manager provides | On 3September 2024, a Treasury | | nancial, climate change and | impact on stock markets and | the Board with assurance | Order was laid before Parliament | | health. Economic risks include | the value of the Company’s | that the Investment Manager | extending the sunset clause until | | recession and sharp changes | investments so reducing returns | is following the investment | 5April 2035. | | in interest rates. Political risks | to Shareholders. | policy agreed by the Board | The Bank of England has | | include a change in government | Companies may face | and appraises the Board of the | started to reduce interest rates, | | policy causing the VCT scheme | restrictions on emissions, water | portfolio’s current positioning | decreasing the cost of debt for | | to be brought to an end, changes | consumption and increased risk | in the light of prevailing market | companies and households. | | to economic or scal policy or the | of environmental hazards. | conditions. The Company’s | Interest rates are expected to fall | | introduction of taris or other | | investment portfolio is well | further during 2025. | | restrictions that might impact | | diversied and the Company has | However, the wars in Ukraine | | upon a company’s operational | | no gearing. | and the Middle East present a | | model, reduce revenues, depress | | The Board regularly reviews | range of risks that may have | | prot margins and increase the | | investment test forecasts and | profound economic and social | | cost of capital. Geopolitical | | liquidity analysis, including under | consequences if they impact | | risks include the impact of wars | | stress scenarios, to monitor | access to certain commodities or | | or conicts. Climate change | | current and anticipate future | much higher prices. | | presents environmental, | | performance against HMRC | The incoming US administration | | geopolitical, regulatory and | | legislation and to ensure the | may adjust US trade policy, | | economic risks. Health risks | | Company has, and will continue | including the introduction of new | | include the possibility of another | | to have, access to sucient | taris on countries exporting | | pandemic. | | liquidity and distributable | goods and services into the | | | | reserves to maintain compliance | US, impacting revenues and | | | | with its key policies. | protability. | The Board keeps abreast of current thinking through contact with industry associations and its advisers. The Investment Manager undertakes a review of ESG factors as part of the investment process. Climate change, or the need to limit its impact, will result in technological innovation as young companies seek to develop solutions and create opportunities for value creation for existing or new Qualifying Companies. Additional risks and further details of the above risks and how they are managed are explained in note15 of the nancial statements. Trends aecting future developments are discussed in the Chair’s statement on pages4 to9 and the Investment Manager’s report on pages28 to31. ### 22 ## Long-term viability statement | In accordance with provision 36 of the AIC Code, the | ● | the nancial position of the Company at | | --- | --- | --- | | Directors have carried out a robust assessment of | | 30September 2024 was strong with no debt or | | the Company’s current position and its emerging | | gearing; | | and principal risks, further details can be found in | ● | | the oer for subscription launched on the principal and emerging risks and uncertainties 9October 2024 has provided further liquidity for section on pages21 to22. This assessment has been deployment in line with the Company’s policies carried out over a longer period than the 12months and to meet future expenses; required by the ‘Going Concern’ provision. The Board ● the OCR of the Company at the year end was conducted this review for a period of ve years, which 2.43%; was selected because it: ● the Company has procedures and forecast ● is consistent with investors’ minimum holding models in place to identify, monitor and control period to retain the 30% income tax relief; risk, portfolio liquidity and other factors relevant ● exceeds the time allowed to deploy funds raised to the Company’s status as a VCT; and under the current oer in accordance with the ● the Investment Manager and the Company’s VCT Rules; and other key service providers have contingency ● is challenging to forecast beyond ve years with plans in place to manage operational sucient accuracy to provide actionable insight. disruptions. The Board considers the viability of the Company as In assessing the Company’s future viability, the Board part of its continuing programme of monitoring risk. has assumed that investors will wish to continue The Company has a detailed risk control framework, to have exposure to the Company’s activities, that documented procedures and forecasting model performance will be satisfactory and the Company in place to reduce the likelihood and impact of risk will continue to have access to sucient capital. taking that exceeds the levels agreed by the Board. Based on this assessment, the Directors have a These controls are reviewed by the Board and reasonable expectation that the Company will be Investment Manager on a regular basis. able to continue in operation and meet its liabilities as The Board has considered the Company’s nancial they fall due over the next ve years. position and its ability to meet its liabilities as they fall due over the next ve years. Forecasts and stress tests have been used to support their assessment and the following factors have been considered in relation to the Company’s future viability: ● the Company maintains a highly diversied portfolio of Qualifying Investments; ● the Company is well invested against the HMRC investment test (100% at 30September 2024) and the Board believes the Investment Manager will continue to have access to sucient numbers of investment opportunities to maintain compliance with the HMRC investment test; ● the Company held £13.6million in cash at the year end (includes £8.8m held with the Custodian); ● the Company has distributable reserves of £106.6million at 30September 2024, equivalent to 29pence per share; ● the Company has a portfolio of Non-Qualifying Investments, most of which are listed in the FTSE350 and oer good levels of liquidity should the need arise; ### 23 ## Other matters Dividend policy specic policies regarding employee, human rights, The Company’s dividend policy is to target a tax free social and community issues but does expect the dividend yield equivalent to 5per cent. of the year Investment Manager to consider them when fullling end NAV per share. The ability to pay dividends is its role. The Company qualies for an exemption dependent on the Company’s available distributable from the Streamlined Energy and Carbon Reporting reserves and cash resources, the Companies Act requirements as a low energy use company with 2006, the UK Listing Rulesand the VCT Rules. The regards to greenhouse gas emissions (producing less policy is non-binding and at the discretion of the than 40,000kWh of energy per year) and, therefore, is Board. Dividend payments may vary from year to year not obliged to report emissions from its operations. in both quantum and timing. The level of dividend The Company, whilst exempt, continues to monitor paid each year will depend on the performance of the and develop its approach to the recommendations Company’s portfolio. In years where there is strong of the Task Force on Climate related Financial investment performance, the Directors may consider Disclosures. a higher dividend payment, including the payment The management of the Company’s investment of special dividends. In years where investment portfolio has been delegated to its Investment performance is not as strong, the Directors may Manager, CGAM. The Company has adopted specic reduce or even pay no dividend. policies on divestment and excluded activities and it expects the Investment Manager to take Discount control policy and management of share account of ESG considerations in its investment liquidity process for the selection and ongoing monitoring of The Company aims to improve liquidity and to underlying investments. The Board has also given maintain a discount of approximately 5per cent. the Investment Manager discretion to exercise to the last published NAV per share (as measured voting rights on resolutions proposed by investee against the mid-price) by making secondary companies. The Investment Manager continues to market purchases of its shares in accordance with strengthen its approach to ESG issues. Further detail parameters set by the Board. regarding the Investment Manager’s approach to ESG This policy is non-binding and at the discretion of the issues can be found on pages12 to13. Board. Its operation depends on a range of factors To minimise the direct impact of its activities, the including the Company’s liquidity, Shareholder Company oers electronic communications where permissions, market conditions and compliance with acceptable to reduce the volume of paper it uses and all laws and regulations. These factors may restrict uses Carbon Balanced paper manufactured at a FSC the eective operation of the policy and prevent the accredited mill to print its nancial reports. Vegetable Company from achieving its objectives. based inks are used in the printing process where Diversity appropriate. The Board comprises three male non-executive Prospects directors and three female non-executive directors The prospects and future development of the with a diverse range of experience, skills, length Company are discussed in detail in the outlook of service and backgrounds. The Board will always section of the Chair’s statement on page 8. appoint the best person for the job. However the Board considers diversity when reviewing Board The Strategic Report is approved, by order of the composition and has made a commitment to Board of Directors. consider diversity when making future appointments. It will not discriminate on the grounds of gender, race, David Brock ethnicity, religion, sexual orientation, age or physical Chair ability. 17December 2024 Environmental Social and Governance (“ESG”) and Considerations The Board seeks to maintain high standards of conduct with respect to ESG issues and to conduct the Company’s aairs responsibly. The Company does not have any employees or oces and so the Board does not maintain any ### 24 ## Summary of VCT regulations To maintain its status as a VCT, the Company must o will use the investment to fund an be approved by HMRC and comply with a number acquisition of another company (or its of conditions. A summary of the most important trade and assets). conditions are detailed below: ● make any investment which is not a Qualifying Investment unless permitted by section 274 ITA; VCTs’ obligations and/or VCTs must: ● return capital to Shareholders before the third ● have 80per cent. (by VCT tax value) of all funds anniversary of the end of the accounting period raised from the issue of shares invested in during which the subscription for shares occurs. Qualifying Investments throughout accounting Qualifying Investments periods of the VCT beginning no later than A Qualifying Investment consists of new shares or 3years after the date on which those shares are securities issued directly to the VCT by a Qualifying issued; Company that at the point of investment: ● have at least 70per cent. by VCT tax value of ● has gross assets not exceeding £15million prior Qualifying Investments in Eligible Shares which to investment and £16million post investment; carry no preferential rights (unless permitted under VCT Rules); ● carries out activities which are regarded as a ● Qualifying Trade; have at least 30per cent. of all new funds raised by the Company invested in Qualifying ● is a private company or is listed on AIM or the Investments within 12months of the end of the AQSE Growth Market; accounting period in which the Company issued ● has a permanent UK establishment; the shares; | | | ● | is not controlled by another company; | | --- | --- | --- | --- | | ● | have no more than 15per cent. by VCT tax value | | | | | | ● | will deploy the money raised for the purposes | of its investments in a single company (as valued of the organic growth and development of a in accordance with the VCT Rulesat the date of Qualifying Trade within 2years; investment); ● has fewer than 250 employees (or fewer than ● derive most of its income from shares and 500 employees in the case of certain Knowledge securities, and, must not retain more than Intensive Companies); 15per cent. of its income derived from shares ● in general, has not been generating commercial and securities in any accounting period; and sales for more than sevenyears (tenyears for ● have their shares listed on the main market Knowledge Intensive Companies); of the London Stock Exchange or a European ● has not received more than the permitted regulated Stock Exchange. annual and lifetime limits of risk nance State aid VCTs must not: investment; and ● make a Qualifying Investment in any company ● has not been set up for the purpose of accessing that: tax reliefs or is in substance a nancing o has (as a result of the investment or business. otherwise) received more than £5million The Finance Act2018 introduced a principles-based from State aid investment sources in approach known as the risk to capital condition to the 12months prior to the investment establish whether the activities or investments of an (£10million for Knowledge Intensive investee company can qualify for VCT tax reliefs. This Companies); condition has two parts: o has (as a result of the investment or ● whether the investee company has an objective otherwise) received more than £12million to grow and develop over the long term; and from State aid investment sources in its ● whether there is a signicant risk that there lifetime (or £20million for Knowledge could be a loss of capital to the investor of an Intensive Companies); amount exceeding the net return. o in general has been generating commercial revenues for more than sevenyears (or tenyears for Knowledge Intensive Companies); or ### 25 ## The Investment Manager & the Administrator CGAM is a wholly owned subsidiary of Canaccord Genuity Wealth Group Limited. The Investment Manager is a leading small cap UK fund manager with a team of 15 fund managers and analysts. Their combined experience aligns with the Company’s published investment policy. As at 30September 2024, the Investment Manager had more than £2.6billion of funds under management across eight unit trusts/OEICS and the Company which are managed under delegation, including approximately £1.7billion invested in small UK companies. The Investment Manager’s VCT fund management team is led by Oliver Bedford with support from Lucy Bloomeld, Abbe Martineau, Anna Salim and Archie Stirling. The VCT fund management team is supported by the wider CGAM fund management team, mainly in the delivery of the Non-Qualifying Investment Strategy through the direct investment of the Company’s capital into companies listed on the main market of the London Stock Exchange, as permitted by the VCT Rules. A short biography on the members of the Investment Manager’s VCT team is set out below. Oliver Bedford – Lead Manager Lucy Bloomeld – Co-Manager Oliver Bedford graduated from Durham University Lucy Bloomeld joined the Investment Manager with a degree in Chemistry. He served in the in August2018 as deputy fund manager, she was British Army for nine years before joining the subsequently appointed as co-manager in 2024. Prior Investment Manager in 2004. After initially working to this she spent eight years as an analyst and UK as an analyst in support of the VCT, Oliver was Small& Mid cap fund manager at BlackRock before appointed as co-manager in 2011 and then lead her most recent role as a European Small& Mid-cap manager in 2019. fund manager with Ennismore Fund Management. Lucy graduated from Durham University in 2007 with a degree in Economics and is a CFA charter holder. Abbe Martineau – Legal Counsel Anna Salim – Portfolio Manager Abbe Martineau graduated from the University Anna Salim joined the Investment Manager in of Birmingham and went on to qualify as a lawyer April2018. Her prior experience includes European in 2005. Her prior legal experience includes lower mid-market private equity investments at eight years at Freshelds, where she advised Revolution Capital Group and equity research at international businesses on a range of corporate Cormark Securities. Anna graduated from the matters and strategic M&A, and eight years at University of Toronto and holds an MBA from University Prudentialplc, where she worked on delivering the of Western Ontario. She is a CFA charter holder. group’s strategic priorities, including its rst ESG Report and the demerger of M&G. She joined the Investment Manager in 2023. ### 26 | Archie Stirling – Investment Analyst | Nicky Warnes – Head of VCT Administration | | --- | --- | | Archie Stirling graduated from Bristol University | Nicky joined the administration team in 2009 and was | | with a BSc in Economics, joined KPMGLLP in | appointed Head of VCT Administration in 2011. Nicky | | 2013 and qualied as a chartered accountant | has been a Chartered Management Accountant since | | in 2016. Archie joined the Investment Manager | 2016. | in September2021 following 5years working in transactional services. | £2.6 | £1.7 | | OVER 1,800 | | --- | --- | --- | --- | | BILLION | BILLION 26 YEAR | | MEETINGS | | of funds under | Invested in small UK | Track record of fund | With companies | | management | companies | management | (12months to | 30September 2024) Source:CGAM (as at 30September 2024) The Administrator CGWL provided administration services to the Company for the year ending 30September 2024. With eect from 1October 2024, the administration agreement between the Company and CGWL was novated to CGAM. Notwithstanding the novation of the administration agreement, CGWL continues to act as the Custodian post- period end. CGWL is a subsidiary of Canaccord GenuityInc., a full service nancial services company listed on the Toronto Stock Exchange. Fees and expenses The annual running costs of the Company are capped at 3.5per cent. of the net assets of the Company. The Investment Manager has agreed to indemnify the Company in relation to all costs that exceed this cap (such costs excluding any VAT payable on the annual running costs of the Company). As at 30September 2024, the Company’s running costs were 2.43per cent. of the net assets of the Company (including irrecoverable VAT). Under the IMA, the Investment Manager receives an annual management fee of 1.7per cent. of the Net Asset Value of the Company. A maximum of 75per cent. of the annual management charge will be chargeable against capital reserves, with the remainder being chargeable against revenue. The Company does not pay the Investment Manager a performance fee. As the Investment Manager to the Company is also investment adviser to the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Growth Fund (in which the Company may, and does, invest), the Investment Manager adjusts the fee it receives under the IMA to ensure that the Company is not charged twice for its services. The Investment Manager carries out some due diligence and transaction services on potential investments internally. Upon completion of an investment, the Investment Manager is permitted under the IMA to charge private investee companies a fee equal to 1.5per cent. of the investment amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment Manager. The Investment Manager may also recover external due diligence and transactional services costs directly from private investee companies. The Administrator is engaged by the Company under the terms of an administration agreement. Under the terms of this agreement, the Administrator is paid an annual fee of £250,000 (plus VAT) in relation to administration services. In addition, CGWL receives a fee of £30,000 per annum in relation to its appointment as the Custodian. Any initial or trail commissions paid to Financial Intermediaries up to 30September 2024 were paid by CGWL. Any future initial or trail commissions paid to Financial Intermediaries will be paid by CGAM. ### 27 # Investment Manager’s report ## Introduction This report covers the 2023/24 financial year, 1 October 2023 to 30 September 2024. The Investment Manager’s report contains references to movements in the NAV per share and NAV total return per share. Movements in the NAV per share do not necessarily mirror the earnings per share reported in the accounts and elsewhere, which convey the profit after tax of the Company within the reported period as a function of the weighted average number of shares in issue for the period. Investment performance measures contained in this report are calculated on a pence per share basis and include realised and unrealised gains and losses. ## Investment report The UK economy bounced back strongly after experiencing a shallow recession in late 2023. For much of the year, the economy has proven to be surprisingly resilient with GDP better than expected, healthy employment markets, strongly positive real wage growth and, as a result, increasing consumer confidence. The more optimistic tone that took hold in the third quarter (of the financial year) was also showing up in measures of UK business confidence and indices that measure economic data points relative to expectations. Unfortunately, more recently these same yardsticks are now signalling that the negative messaging of the new Government is starting to weigh on the economy. It has been an unusual and clumsy start for a government that is keen to promote itself as pro-growth. If there has been huge uncertainty about the outlook for US interest rates, the same has not been true for UK monetary policy. Interest rates have started to come down broadly as expected with two 25 basis point reductions in August and in November, providing relief to many households and companies. Interest rates are expected to decline further as we head through the next year, potentially down to 4.00% by September 2025. We have frequently lagged the impact of sustained fund outflows on UK equities, which have remained negative across the year. That having been said, we and other small cap managers saw an improvement in the low dynamic within UK small companies in the early summer. Unfortunately, the improving picture did not survive the 2024 Autumn Budget with UK equity fund flows turning more deeply negative. Although bookended by two periods of notably poor performance, for the most part the AIM All-Share Index has been on an improving trend. After a difficult start to the financial year, positive momentum was building as the year progressed, right through to the announcement on 21 May 2024 that the UK would hold a general election. Concerns about potential changes to fiscal policy had an immediate and strongly negative impact on AIM that continued through to year end and beyond. Although the net outcome was a gain of 3.90% in the FTSE AIM All-Share Index for the 12 months to 30 September 2024, the index lagged the FTSE UK Small Cap Index (excluding Investment Trusts) by 18.47% across the year, with most of that (13.07%) underperformance occurring since the 2024 General Election was called. ## Performance In the 12 months to 30 September 2024, the NAV per share decreased from 46.34 pence to 40.55 pence, a NAV total return to investors of -1.79 pence per share after adding back the 4.00 pence of dividends paid in the year, this translates to a loss of -3.86%. The qualifying investments made a net loss of -2.73 pence per share whilst the non-qualifying investments made a net gain of 1.17 pence per share. The -0.23 pence adjusting balance was the net of running costs and investment income. 28 The contribution to NAV is split out in further detail below: ![img-3.jpeg](img-3.jpeg) Notwithstanding the more negative mood that has set in since the 2024 General Election, corporate news flow steadily improved as the year progressed and the economy recovered from the recession in late 2023. For many retailers and consumer facing companies, the key Christmas trading period and the months that followed were challenging. More broadly speaking, we observed an increasing number of companies reporting trading that was in line with their expectations, with fewer companies reducing their guidance. The 2024 Autumn Budget cast a long shadow over AIM, undermining performance and introducing idiosyncratic factors that have distorted valuations. The composition of the Shareholder register became an unusually important determinant of share price performance. Whilst market distortions have, in our opinion, weighed on performance within the year, they have not been a factor in those companies that have made the most significant individual contributions to performance. As is nearly always the case, management execution has been the dominant driver of the outcome for most of the ten companies we highlight below. Looking forward, we believe that the qualifying portfolio remains well set and attractively priced. We continue to expect investor interest in small UK companies to return, following the lead of those private equity and trade investors that continue to exploit market inefficiencies. There is plenty of opportunity for those able and willing to make a long term investment in UK innovation and growth. Beeks Group (+177%, +0.83%pence per share) reported excellent FY24 results with strong revenue and EBITDA growth of 27% and an 18% increase in annualised committed monthly recurring revenue to £28m. The company is successfully winning large contracts for its Exchange Cloud and Proximity cloud offering. Beeks Group's multi-year contract with one of the world's largest exchanges received regulatory approval in August 2024 and is expected to launch in FY25 and drive considerable revenue growth. The company has a strong balance sheet with net cash of £6.6m. Cohort (+93%, +0.60%pence per share) issued several positive trading updates over the year and reported record April FY24 results with revenues increasing 11% to £202.5m and operating profit of £21.1m. Several contract wins, including a £135m 10-year contract from the Ministry of Defence to supply the Royal Navy with its Trainable Decoy Launcher System, contributed to a very strong order intake of £392m over the year (+78% over the prior year). The last-reported order book of £575m provides over 90% cover for April FY25 revenue forecasts as well as visibility out to 2037. Intercede (+349%, +0.45%pence per share) delivered exceptionally strong results for the year to March 2024 with revenue growth of 65% to £20.0m and profit before tax of £5.6m. This included a record contract with a large US Federal Agency for over $8m, which was treated as an exceptional item. This good operating momentum has continued into the current year and Intercede has announced several more contract wins for its MyID credential management system which underpin the forecasts for FY25. The company has a strong balance sheet with £16.2m net cash. Shares in Learning Technology Group (+48%, +0.40%pence per share) re-rated over the early part of the year as investor sentiment towards the stock improved. Whilst the company reported that weak end markets were weighing on revenues, a strong margin performance has moderated the impact on profit guidance. Good cash generation, coupled with 29 the sale of Vector VMS, has left the company with a substantially stronger unlevered (net cash) balance sheet. In September 2024, the company announced an approach by private equity firm General Atlantic with a possible cash offer at 100p alongside an option for LTG Shareholders to re-invest a portion of their holding into the private acquisition vehicle. Skillcast (+137%, +0.31pence per share) reported strong 2023 results with revenues growing 15% to £11.3m. 2024 interim results showed further progress as revenues grew 24% to £6.4m and the company broke even at the EBITDA level. Annualised recurring revenues have increased by over 50% from £6.8m in December 2022 to £10.3m in June 2024. The balance sheet is strong, with net cash of £8.3m. Equipmake (-72%, -1.63pence per share) reported FY24 revenues of £8.1m, 60% growth on the prior year. EBITDA losses were higher and cash lower than forecast due to a revenue miss, cost overruns and working capital movements. The company has invested into a new management team over the year, appointing a more experienced COO, CFO and business development director. Revised guidance reflects the pivot to a higher margin less capital intensive business model that should result in reduced losses in FY25 and bring forward the transition to profit in FY26. Equipmake has established relationships with several high-calibre original equipment manufacturer (OEM) for its components and drivetrain solutions and looks to build on this and announce further partnership deals in due course. The company raised a further £3m in October to support its working capital requirements. Surface Transforms (-99%, -0.76pence per share) faced significant production issues over the period as the company sought to scale-up production rates to meet customer demand. As a result, revenues were significantly below target and costs also exceeded plans. In May 2024, the company raised £8.5m of additional funding for working capital and capex in a deeply discounted fundraise that was not VCT qualifying and very dilutive to existing Shareholders. The investment was sold post period end. Engage XR (-71%, -0.49pence per share) warned in December 2023 that profits would be below expectations due to project delays. In April 2024, the company reported revenues of €3.7m (-5% year on year), and an EBITDA loss of €-4.0m for the 12 months to December 2023. The balance sheet is strong with net cash of €7.9m following the €10.5m fundraise earlier in 2023. More recently, the company announced its first €1m+ contract with a Middle East based education and training company through its partnership with PWC and appointed an experienced non-executive chair to the board. Children's products and clothing retailer Kidly (-54%, -0.42pence per share) experienced a difficult trading environment through Christmas 2023 and early 2024 that was compounded by balance sheet constraints. Although revenue performance was below budget, operational efficiencies resulted in significantly lower losses. Trading improved as the year progressed. Reflecting the need for additional funding, the fair value of the equity was reduced to nil and the value of the debt heavily impaired. Subsequently, Kidly secured new funding as part of a financial restructuring that included a partial conversion of the loan note instrument into new preferred shares. The reduction in risk allowed a partial recovery in the fair value of the convertible loan note instrument. In a significant announcement, Arecor Therapeutics (-67%, -0.23pence per share) reported that its ultra-concentrated and ultra-rapid acting insulin candidate AT278 demonstrated superiority to the current best-in-class insulins in a Phase 1 clinical trial for patients with Type 2 diabetes and high BMI. However, supply chain issues in its subsidiary Tetris Pharma negatively impacted revenues and cash flow. Despite a more challenging fundraising environment for life-sciences companies on AIM, the company successfully raised £6.4m to continue its insulin development programmes and provide working capital funding for Tetris Pharma. Reflecting the very difficult market, there were no funds raised from AIM VCTs by companies undertaking an IPO on AIM in the year under review. Despite this, we invested £9.2m into seven Qualifying Companies including one new investment into a company listed on AIM, one new investment into a company listed on the AQSE APEX market, three follow on investments into existing portfolio companies listed on AIM, one follow on investment into a company listed on the AQSE APEX market and one new investment into a private company. The three new investments included Abingdon Health plc, Oberon Investments Group plc and Qureight Ltd. The follow on investments included Eden Research plc, Equipmake plc, PCI Pal plc and Strip Tunning plc. We reduced our investments in Blackbird plc, Team Internet Group plc and made complete exits from Abcam plc, Instem plc, Osirium plc and Renalytix plc, Smoove plc and Velocys plc. Bidstack Group plc was placed into administration. #### Portfolio structure The VCT is comfortably above the HMRC defined investment test and ended the period at 100% invested as measured by the HMRC investment test. By market value, the weighting to qualifying 30 investments decreased from 58.7% to 56.0% following several disposals of qualifying companies. The allocation at the year end to non-qualifying equity investments decreased from 10.1% to 8.1%. In line with the investment policy, we made investments in the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Growth Fund as temporary homes for proceeds from fundraising; the allocations increased from 5.4% to 13.4% and returned +0.57%pence per share in the period. The non-qualifying direct equity investments, which are mostly held in FTSE350 companies contributed +0.37%pence per share. Within the period, the largest contributors to non-qualifying gains were Chemring (+32.3%, +0.12%pence per share), Hollywood Bowl (+25.3%, +0.11%pence per share) and TP ICAP (+38.7%, +0.10%pence per share). The largest non-qualifying losses came from XP Power (-55.4%, -0.12%pence per share), Energean (-13.5%, -0.04%pence per share) and Bodycote (-7.7%, -0.03%pence per share). We have maintained a substantial investment in short-dated investment grade corporate bonds. Within the year, we reinvested the proceeds from the redemption of one Mark& Spencer's bond into another Mark& Spencer's bond, acquired a new Unilever bond which was subsequently redeemed just prior to year-end and made a small investment into a second Next bond. In the round, the allocation increased from 11.4% to 12.9%. The average yield to maturity at year end was 4.7%. Our cash weighting dropped from 12.7% to 9.3% (1). The Company invests across all available investment sectors, although VCT Rules tends to promote investment into sectors such as technology, healthcare and consumer discretionary. In respect of the Qualifying Investment portfolio, the weightings to these three sectors changed slightly over the year as a consequence of additional investment and share price performance, taking their respective shares to 40.4%, 21.0% and 11.8%. There is also a 13.8% weighting to industrials. The HMRC investment tests are set out in Chapter 3 of Part 6 Income Tax Act 2007, which should be read in conjunction with this investment manager's report. Funds raised by VCTs are first included in the investment tests from the start of the accounting period containing the third anniversary of the date on which the funds were raised. Therefore, the allocation of qualifying investments as defined by the legislation can be different to the portfolio weighting as measured by market value relative to the net assets of the VCT. (1) Net of prepayments and accruals. ## Share buy backs & discount control 10,657,350 shares were acquired in the year at an average price of 41.97%pence per share. The share price decreased from 43.00p to 39.00p and traded at a discount of 6.78% following the publication of the 30 September 2024 NAV on 10 October 2024. ## Post period end update The NAV per share has decreased from 40.55%pence to 40.29%pence in the period to 6 December 2024, a decrease of 0.6%. As at 17 December 2024, the share price of 38.40%pence represented a discount of 4.69% to the last published NAV per share. Economic activity has noticeably slowed since the early summer with the economy growing by a meagre +0.1% in the 3 months to October 2024, having peaked at +0.7% in the 3 months to May 2024. Business and consumer confidence has dipped and corporate newsflow has noticeably softened, although trading continues to vary markedly by sector. However, this period of weaker activity is not expected to last and the economy should pick up momentum as we head through 2025. Whilst many businesses (and business owners) are understandably frustrated by changes to NICs, Business Property Relief and Business Asset Disposal Relief, households and consumers should at least benefit from lower borrowing costs and, at least within the public sector, substantially positive real wage growth. For most portfolio companies, the outlook is not significantly altered by the Autumn 2024 Budget. Increases in employment taxes, whilst unhelpful, are not a significant factor within the portfolio and we remain confident that our portfolio companies can continue to build value through good execution. When and how that crystallises remains difficult to forecast in the short-term. Deal flow has improved noticeably since the Autumn 2024 budget and we are active on a large number of deals. We are also seeing signs of a recovery in the pipeline of companies looking to undertake an IPO. For further information please contact: **Oliver Bedford** Lead Fund Manager 17 December 2024 31 ## Investment portfolio summary ## As at 30 September 2024 | | | | Cumulative | | | | | Change in | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets | | | movement | | | | | value for | | | | | | | % at | Cost | | in value | | Valuation | | | the year | | | | | | | | | | | | | | | (1) | | (2) | | 30.09.24 | | £000 | | | £000 | | £000 | | £000 | | Market COI | | Equity Qualifying Investments Beeks Financial Cloud Group plc 3.11 1,038 3,569 4,607 2,945 AIM Yes Cohort plc 3.04 619 3,884 4,503 2,166 AIM Ye s Learning Technologies Group plc 2.89 2,238 2,037 4,275 1,388 AIM No Eagle Eye Solutions Group plc 2.69 1,642 2,340 3,982 (563) AIM Ye s PCI-PAL plc 2.43 2,703 890 3,593 (706) AIM Ye s The Property Franchise Group plc 2.31 1,139 2,287 3,426 1,753 AIM Yes (3) Innity Reliance Ltd (My 1st Years) 2.10 2,500 607 3,107 364 Unlisted Yes Diaceutics plc 1.82 1,550 1,141 2,691 591 AIM Yes Qureight Ltd 1.69 2,500 – 2,500 – Unlisted No Equipmake Holdings plc 1.57 4,162 (1,834) 2,328 (5,803) AIM No Maxcyte Inc 1.47 1,270 905 2,175 300 AIM Ye s Intercede Group plc 1.40 305 1,767 2,072 1,611 AIM Ye s Craneware plc 1.29 125 1,786 1,911 470 AIM Ye s Skillcast Group plc 1.29 1,570 340 1,910 1,104 AIM No Aquis Exchange plc 1.21 765 1,024 1,789 – AIM Ye s Abingdon Health plc 1.14 1,823 (140) 1,683 (140) AIM No Fadel Partners, Inc 1.13 2,300 (623) 1,677 (623) AIM No Team Internet Group plc 1.05 565 997 1,562 4 AIM No XP Factory plc 1.04 4,068 (2,520) 1,548 (581) AIM Ye s Itaconix plc 1.04 3,025 (1,483) 1,542 (107) AIM No Zoo Digital Group plc 1.04 2,159 (619) 1,540 (220) AIM No Intelligent Ultrasound Group plc 0.93 1,550 (173) 1,377 (275) AIM No AnimalCare Group plc 0.91 720 630 1,350 332 AIM Yes SCA Investments Ltd (Gousto) 0.89 2,484 (1,166) 1,318 (237) Unlisted No Oberon Investments Group plc 0.85 1,461 (208) 1,253 (209) AIM No Zappar Ltd 0.81 1,600 (400) 1,200 (229) Unlisted No Tortilla Mexican Grill plc 0.81 1,125 75 1,200 (550) AIM Ye s Eden Research plc 0.80 1,855 (674) 1,181 (336) AIM No Equals Group plc 0.77 750 396 1,146 51 AIM No C4X Discovery Holdings Ltd 0.75 2,300 (1,193) 1,107 (693) Unlisted No Idox plc 0.73 135 949 1,084 (58) AIM Ye s EKF Diagnostics Holdings plc 0.61 565 335 900 96 AIM No Ilika plc 0.57 1,636 (785) 851 (259) AIM No Blackbird plc 0.56 594 238 832 (117) AIM No Globaldata plc 0.55 173 635 808 211 AIM Yes BiVictriX Therapeutics Ltd 0.58 1,600 (828) 772 (408) Unlisted No Tristel plc 0.51 543 217 760 (93) AIM No Engage XR Holdings plc 0.47 3,453 (2,762) 691 (1,727) AIM No One Media iP Group plc 0.44 1,141 (489) 652 (244) AIM Ye s Science in Sport plc 0.39 1,479 (902) 577 289 AIM Ye s Nexteq plc 0.38 1,209 (649) 560 (170) AIM No Creo Medical Group plc 0.37 2,329 (1,777) 552 (161) AIM Yes Crimson Tide plc 0.35 1,260 (735) 525 (231) AIM Ye s Tan Delta Systems plc 0.33 504 (20) 484 19 AIM No Verici DX plc 0.31 1,939 (1,476) 463 (71) AIM No Arecor Therapeutics plc 0.27 1,687 (1,290) 397 (819) AIM No Rosslyn Data Technologies plc 0.27 1,345 (951) 394 (322) AIM Ye s Faron Pharmaceuticals Oy 0.25 1,133 (763) 370 (125) AIM No Hardide plc 0.23 3,566 (3,218) 348 (290) AIM Ye s Everyman Media Group plc 0.16 600 (369) 231 25 AIM No K3 Business Technology Group plc 0.14 270 (60) 210 (120) AIM Ye s Eneraqua Technologies plc 0.14 1,401 (1,194) 207 (298) AIM No Strip Tinning Holdings plc 0.13 1,054 (866) 188 (154) AIM No Angle plc 0.12 1,158 (974) 184 (149) AIM No Crossword Cybersecurity plc 0.09 2,039 (1,906) 133 (573) AIM No Polarean Imaging plc 0.07 2,081 (1,978) 103 (587) AIM No Mycelx Technologies Corporation 0.05 361 (282) 79 (51) AIM Ye s ### 32 | | | | Cumulative | | | | | Change in | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets | | | movement | | | | | value for | | | | | | | % at | Cost | | in value | | Valuation | | the year | | | | | | | | | | | | | | | | (1) | | (2) | | 30.09.24 | | £000 | | | £000 | | £000 | | £000 | | Market COI | | Trakm8 Holdings plc 0.03 486 (432) 54 (80) AIM No Surface Transforms plc 0.02 1,744 (1,709) 35 (2,639) AIM No Fusion Antibodies plc 0.02 624 (597) 27 (9) AIM No Gnity plc – 2,026 (2,021) 5 (23) AIM No Bidstack Group plc – 2,733 (2,733) – (314) Unlisted No (3) Kidly Ltd – 2,660 (2,660) – (326) Unlisted No (3) Laundrapp Ltd – 2,450 (2,450) – – Unlisted No (3) Airportr Technologies Ltd – 1,888 (1,888) – – Unlisted No Mporium Group plc – 33 (33) – – Unlisted No Flowgroup plc – 26 (26) – – Unlisted No (4) Infoserve Group plc – – – – – Unlisted No Total – equity Qualifying Investments 53.41 101,836 (22,807) 79,029 (7,971) Qualifying xed income investments Strip Tinning Holdings plc (convertible loan notes) 1.45 2,000 158 2,158 158 Unlisted No Kidly Ltd (convertible loan notes) 0.85 1,400 (138) 1,262 (1,138) Unlisted No Rosslyn Data Technologies plc (convertible loan notes) 0.24 300 58 358 58 Unlisted No Total qualifying xed income investments 2.54 3,700 78 3,778 (922) Total Qualifying Investments 55.95 105,536 (22,729) 82,807 (8,893) Non-qualifying funds IFSL Marlborough UK Micro-Cap Growth fund 7.01 9,339 1,044 10,383 1,044 Unlisted No IFSL Marlborough Special Situations fund 6.34 9,833 (448) 9,385 1,001 Unlisted No Vaneck Gold Miners UCITS ETF 0.44 634 22 656 22 Main No Total non-qualifying funds 13.79 19,806 618 20,424 2,067 Equity non-qualifying investments Hollywood Bowl Group plc 1.26 1,566 294 1,860 375 Main Ye s Bodycote plc 0.91 1,534 (179) 1,355 (114) Main No National Grid plc 0.90 1,229 101 1,330 162 Main No TP ICAP Group plc 0.89 1,022 300 1,322 369 Main Ye s Chemring Group plc 0.84 1,023 217 1,240 405 Main Ye s WH Smith plc 0.79 1,220 (54) 1,166 91 Main Ye s Rotork plc 0.63 944 (10) 934 59 Main No BAE Systems plc 0.63 593 334 927 246 Main Ye s Wickes Group plc 0.59 950 (75) 875 167 Main Ye s Shell plc 0.49 804 (77) 727 (77) Main No Tortilla Mexican Grill plc 0.09 161 (30) 131 (60) AIM Ye s Mycelx Technologies Corporation 0.06 298 (206) 92 (60) AIM Ye s Genagro Services Ltd – – – – 2 Unlisted Ye s Total – equity non-qualifying investments 8.08 11,344 615 11,959 1,565 Non-qualifying xed income – bonds British Telecommunications 5.75% SNR BDS 07/12/2028 2.12 3,130 2 3,132 174 Main No Marks and Spencer plc 3.75% SNR EMTN 19/05/2026 2.06 3,032 17 3,049 17 Main No Natwest Markets plc 6.375% SNR EMTN 08/11/2027 2.05 3,017 18 3,035 140 Main No Royal Bank of Canada 5% SNR NTS 24/01/2028 2.05 3,036 (8) 3,028 153 Main No Next Group plc 4.375% SNR BDS 02/10/2026 2.01 2,987 (12) 2,975 96 Main No ### 33 | | | | Cumulative | | | | | Change in | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets | | | movement | | | | | value for | | | | | | | % at | Cost | | in value | | Valuation | | | the year | | | | | | | | | | | | | | | (1) | | (2) | | 30.09.24 | | £000 | | | £000 | | £000 | | £000 | | Market COI | | Barclays plc 3.25% SNR NTS 12/02/2027 1.95 2,912 (25) 2,887 145 Main No Next Group plc 3% GTD SNR BDS 26/08/2025 0.66 969 12 981 13 Main No Total non-qualifying xed income – bonds 12.90 19,083 4 19,087 738 Total – non-qualifying investments 34.77 50,233 1,237 51,470 4,370 Total investments 90.72 155,769 (21,492) 134,277 (4,523) Cash at bank 3.2 4,766 Funds held with Custodian 6.0 8,846 Prepayments & accruals 0.08 120 Net assets 100.00 148,009 (1) The change in fair value has been adjusted for additions and disposals in the year and as such does not reconcile to the unrealised total in note7. The dierence is £0.8million which is the total of 17 full investment disposals in the year. (2) COI – Co investments with other funds managed by the Investment Manager at 30September 2024. (3) Dierent classes of shares held in unlisted companies within the portfolio have been aggregated. (4) Impaired fully through the prot and loss account and therefore shows a zero cost. The investments listed below are either listed, headquartered or registered outside the UK: Listed Headquartered Registered Listed Investments: Fadel Partners, Inc UK USA USA Faron Pharmaceuticals Oy UK/Finland Finland Finland Itaconix plc UK USA UK Maxcyte Inc UK/USA USA USA Mycelx Technologies Corporation UK USA USA Polarean Imaging plc UK USA UK Unlisted private companies: (1) Genagro Ltd – UK Jersey (1) Companies awaiting liquidation. ### 34 Total Investments by market sector as at 30 September 2024 ![img-4.jpeg](img-4.jpeg) Total Investments by market sector as at 30 September 2023 ![img-5.jpeg](img-5.jpeg) 35 ## As at 30 September 2024 (by market value) The top ten investments are shown below. Each investment is valued by reference to the bid price or, in the case of unquoted companies, the IPEV guidelines using one or more valuation techniques according to the nature, facts and circumstances of the investment. Forecasts, where given, are drawn from a combination of broker research and/or Bloomberg consensus forecasts and exclude amortisation, share based payments and exceptional items. Forecasts are in relation to a period end for which the company results are yet to be released. Published accounts are used for private companies or public companies with no published broker forecasts. The net asset figures and net cash values are from published accounts in most cases. | Beeks Financial Cloud Group plc | | Share Price: 244.0p | | | --- | --- | --- | --- | | Investment date | November 2017 | Forecasts for the year to | June 2025 | | Equity held | 2.84% | Turnover (£'000) | 39,600 | | Av. Purchase Price | 55.0p | Profit before tax (£'000) | 6,100 | | Cost (£'000) | 1,038 | Net cash June 2024 (£'000) | 7,100 | | Valuation (£'000) | 4,607 | Net assets June 2024 (£'000) | 37,495 | ### Company description Beeks Financial Cloud Group plc is a cloud-based connectivity provider of technology solutions to the financial services sector. The company's Infrastructure-as-a-Service model is optimised for low-latency private cloud compute, connectivity and analytics, providing the flexibility to deploy and connect to exchanges, trading venues and public cloud for a true hybrid cloud experience. The company serves over 1,000 enterprise clients from its global network of data centres. | Cohort plc | | Share Price: 948.0p | | | --- | --- | --- | --- | | Investment date | February 2006 | Forecasts for the year to | April 2025 | | Equity held | 1.14% | Turnover (£'000) | 241,200 | | Av. Purchase Price | 130.2p | Profit before tax (£'000) | 25,800 | | Cost (£'000) | 619 | Net cash October 2024 (£'000) | 37,900 | | Valuation (£'000) | 4,503 | Net assets October 2024 (£'000) | 111,203 | ### Company description Cohort provides electronic and surveillance technology solutions. The company offers electronic warfare operational support, secure communication systems and networks, test systems and data management. Cohort serves defence and security, transport, offshore energy and other commercial markets. | Learning Technologies Group plc | | Share Price: 95.0p | | | --- | --- | --- | --- | | Investment date | July 2015 | Forecasts for the year to | December 2024 | | Equity held | 0.57% | Turnover (£'000) | 477,000 | | Av. Purchase Price | 49.7p | Profit before tax (£'000) | 77,000 | | Cost (£'000) | 2,238 | Net (debt) June 2024 (£'000) | (57,524) | | Valuation (£'000) | 4,275 | Net assets June 2024 (£'000) | 443,743 | ### Company description Learning Technologies Group provides workplace digital learning and talent management software and services to corporate and government clients. The group offers end-to-end learning and talent solutions ranging from strategic consultancy, through a range of content and platform solutions to analytical insights that enable corporate and government clients to meet their performance objectives. 36 | Eagle Eye Solutions Group plc | | Share Price: 460.0p | | | --- | --- | --- | --- | | Investment date | April 2014 | Forecast for the year to | June 2025 | | Equity held | 2.92% | Turnover (£'000) | 55,500 | | Av. Purchase Price | 189.7p | Profit before tax (£'000) | 6,200 | | Cost (£'000) | 1,642 | Net cash June 2024 (£'000) | 10,404 | | Valuation (£'000) | 3,982 | Net assets June 2024 (£'000) | 34,056 | ### Company description Eagle Eye is a SaaS technology company that creates digital connections enabling personalised, real-time marketing solutions for large retailers. Through Eagle Eye AIR, the company's loyalty and promotions omnichannel SaaS platform, companies connect all aspects of the customer journey in real time, unlocking the capability to deliver personalisation, streamline marketing execution and open up new revenue streams through promotions, loyalty apps, subscriptions and gift services. | PCI Pal plc | | Share price: 46.80p | | | --- | --- | --- | --- | | Investment date | January 2018 | Forecast for the year to | June 2025 | | Equity held | 10.58% | Turnover (£'000) | 22,400 | | Av. Purchase Price | 35.2p | Profit before tax (£'000) | 800 | | Cost (£'000) | 2,703 | Net (debt) June 2024 (£'000) | 4,332 | | Valuation (£'000) | 3,593 | Net (liabilities) June 2024 (£'000) | (1,970) | ### Company description PCI PAL plc is a provider of SaaS solutions that allows companies to take payments from their customers securely. Its products secure payments and data in any business communications environment including voice, chat, social, email, and contact centre and is integrated to, and resold by, business communications vendors and payment service providers. | The Property Franchise Group plc | | Share price: 415.0p | | | --- | --- | --- | --- | | Investment date | December 2013 | Forecast for the year to | December 2024 | | Equity held | 2.56% | Turnover (£'000) | 68,700 | | Av. Purchase Price | 138.0p | Profit before tax (£'000) | 22,300 | | Cost (£'000) | 1,139 | Net (debt) June 2024 (£'000) | (14,302) | | Valuation (£'000) | 3,426 | Net assets June 2024 (£'000) | 143,972 | ### Company description The Property Franchise Group is the UK's largest property franchise business and manages the second largest estate agency network and portfolio of lettings properties in the UK. The group has 1,946 outlets, manages more than 152k tenanted properties and is expected to sell in excess of 28k properties per annum. The group also includes an established financial services business. | Infinity Reliance Ltd (My First Years) | | Unquoted | | | --- | --- | --- | --- | | Investment date | May 2018 | Results for the year to | December 2023 | | Voting rights held | 9.66% | Turnover (£'000) | 20,973 | | Av. Purchase Price | 4,670.4p | Profit before tax (£'000) | 2,885 | | Cost (£'000) | 2,500 | Net cash December 2023 (£'000) | 6,221 | | Valuation (£'000) | 3,107 | Net assets December 2023 (£'000) | 9,121 | | Income recognised in period (£) | – | | | ### Company description My 1st Years is a European retail platform that focusses on the sale of personalised baby and children's gifts primarily through e-commerce channels. The product range includes bespoke presents for newborn babies to seven year olds, for christenings, birthdays and Christmas. 37 | Diaceutics plc | | Share price: 132.0p | | | --- | --- | --- | --- | | Investment date | July 2019 | Forecast for the year to | December 2024 | | Equity held | 2.41% | Turnover (£'000) | 30,100 | | Av. Purchase Price | 76.0p | (Loss) before tax (£'000) | (2,800) | | Cost (£'000) | 1,550 | Net cash June 2024 (£'000) | 16,749 | | Valuation (£'000) | 2,691 | Net assets June 2024 (£'000) | 38,740 | ### Company description The Diaceutics proprietary diagnostic commercialisation platform ("DXRX") integrates real-world diagnostic testing data from a global network of laboratories to enable the supply of precision medicine therapeutics to patients. The company provides its solutions to leading pharmaceutical and biotech companies in Europe and the USA. | Queujah Ltd | | Unquoted | | | --- | --- | --- | --- | | Investment date | March 2024 | Results for the year to | December 2023 | | Voting rights held | 15.10% | Turnover (£'000) ^{(1)} | – | | Av. Purchase Price | 7,394.0p | Profit/(loss) before tax (£'000) ^{(1)} | – | | Cost (£'000) | 2,500 | Net cash December 2023 (£'000) | 380 | | Valuation (£'000) | 2,500 | Net assets December 2023 (£'000) | 846 | | Income recognised in period (£) | – | | | (1) Company has total exemption from full accounts. ### Company description Queujah's proprietary technology uses artificial intelligence to analyse medical images of the respiratory system through its innovative approach to clinical data curation and artificial intelligence-powered digital biomarkers. This approach enables researchers and scientists to analyse disease progression and drug responses in patients across a range of complex conditions. | Strip Tinning Holdings plc^{(1)} | | Share price: 33.0p | | | --- | --- | --- | --- | | Investment date | February 2022 | Forecast for the year to | December 2024 | | Equity held | 3.13% | Turnover (£'000) | 9,000 | | Av. Purchase Price | 118.8p | (Loss) before tax (£'000) | (3,700) | | Cost (£'000) | 3,054 | Net (debt) June 2024 (£'000) | (2,247) | | Valuation (£'000) | 2,346 | Net assets June 2024 (£'000) | 4,240 | (1) Holding inclusive of equity and convertible loan note investments. ### Company description Strip Tinning manufactures specialist flexible electrical connectors related primarily to heating and antennae systems embedded within automotive glazing and to the connection of the cells within electric vehicle battery packs, increasingly using flexible and lightweight printed circuit technology. For further information please contact: **Oliver Bedford** Lead Fund Manager 17 December 2024 38 ## Governance ### 39 ## Board of Directors | David Brock (Chair) | Oliver Bedford | | --- | --- | | Date of Appointment: 28 September 2010 | Date of Appointment:13December 2016 | | David Brock is an experienced company chair in both | Oliver Bedford sits on the Board as part of his | | private and public companies and a former main board | role as lead fund manager at the Company’s | | director of MFI Furniture Group plc. David is chair of | Investment Manager. | Molten Ventures VCT plc and ECS Global GroupLtd. David was appointed as Chair of the Board on 4February 2020. Angela Henderson (MSPEC Chair) Megan McCracken Date of Appointment:29October 2019 Date of Appointment:1June 2022 Angela Henderson is a non-executive director at Megan McCracken is chair of State Street Trustees Macquarie Capital (Europe) Limited, Wells Fargo Securities Limited and a non-executive director and chair of International Limited and Polar Capital Global Financials the remuneration and nomination committees Trustplc, following an executive career in nancial of Folk2Folk. She was awarded the Institute of services. She has invested in early-stage technology Directors’ Chair’s Award. Megan held executive companies and held non-executive board seats in the roles at HSBC and Citibank, was a PwC consultant asset management sector. Previously, she has served on and a Boeing Satellite Systems engineer. She was the governing body of a London hospital and a healthcare previously the senior independent director of charity. She is a solicitor of the Senior Courts of England& GB Bank and has an MBA from MIT Sloan and a Wales. Bachelor of Science in Aerospace Engineering. Busola Sodeinde Justin Ward (Audit Committee Chair) Date of Appointment:1June 2022 Date of Appointment:1November 2020 Busola Sodeinde is a qualied Chartered Accountant Justin Ward is a qualied Chartered Accountant. and has spent most of her executive career in nancial He is a non-executive director and chair of the services. She is a non-executive director and chair of investment committee of The Income and the Audit Committee of TR Property Investment Trust Growth VCTplc and chair of Schroder British plc, a non-executive director and chair of the Audit and Opportunities Trustplc. He is also a non-executive Governance Committee of Railpen Limited, a member of director of School Explained Limited and has the Board of Governors for Church Commissioners, is a previously served on the board of a number of non-executive director at The Ombudsman Services and private companies. Justin formerly led growth a Trustee of The Scouts. Busola is the founder of a social equity and private equity buyout transactions at start up and is also an activator supporting women-led CVC Capital Partners, Hermes Private Equity and ventures. Bridgepoint Development Capital. ### 40 ## Directors’ report ## For the year end 30 September 2024 The Directors of Hargreave Hale AIM VCTplc in the execution of their duties and exercise of the present their Annual Report together with the powers as Directors of the Company. audited nancial statements of the Company for Disclosable interests the year from 1October 2023 to 30September 2024, incorporating the corporate governance No Director is under contract of service with the statement on pages 50 to 55. The principal activity Company and, other than as disclosed in note14, of the Company has been outlined in the Strategic no contract existed during or at the end of the year Report on page 10. The Board believes that the in which any Director was materially interested and Annual Report taken as a whole is fair, balanced which was signicant in relation to the Company’s and understandable and provides the information business. necessary for Shareholders to assess the Company’s Revenue and dividends position, performance, business model and strategy. The statutory loss for the year amounted to Directors £6,585,156 (2023:loss £29,726,556). An interim The Directors of the Company during the year dividend of 1 penny per ordinary share was paid on were David Brock (Chair), Oliver Bedford, Angela 26July 2024 (2023:1 penny per ordinary share). Henderson, Megan McCracken, Busola Sodeinde and Aspecial dividend of 1.50pence per ordinary Justin Ward. Brief biographical details are given on share was also paid on 26July 2024 (2023:0). The page 40. nal dividend of 1.25pence per ordinary share for the year ended 30September 2024 is due to be Directors’ interests paid on 14February2025 (2023:1.50pence per The Directors’ interests (including those of ordinary share). A special dividend of 1.50pence per connected persons) in the issued share capital of the ordinary share has been approved by the Board. The Company are outlined in the Directors’ remuneration distribution will return to Shareholders proceeds report on page 45. There is no minimum holding from various exits and disposals. The special dividend requirement, in the shares of the Company, that the will be paid together with the nal dividend on Directors are required to adhere to. 14February 2025. Oliver Bedford, David Brock, Angela Henderson and Capital structure Justin Ward are Shareholders in the Company. Their The Company’s capital structure is summarised in current shareholdings, as at the date of this Annual notes1 and 11 to the nancial statements. Report, and subsequently, are stated in the Directors’ remuneration report on page 48. Voting rights in the Company’s shares Each ordinary Shareholder is entitled to one vote Directors’ and ocers’ liability insurance on a show of hands and on a poll to one vote for Directors’ and ocers’ liability insurance cover is held each ordinary share held. Other than with regard by the Company in respect of the Directors. to Directors not being permitted to vote on Deeds of indemnity matters upon which they have an interest, there are no restrictions on the voting rights of ordinary The Company has entered into deeds of indemnity Shareholders. in favour of each of the Directors in order to provide additional protection to the Directors in certain Substantial holdings in the Company liability scenarios. The deeds of indemnity give each As at 30September 2024 and the date of this Director the benet of an indemnity out of the assets report, the Company was aware of the following and prots of the Company, to the extent permitted shareholdings of 3% or more of the Company’s by the Companies Act2006 and subject to certain issued ordinary share capital: limitations against liabilities incurred by each of them | | | Number of | | | Number of | | | --- | --- | --- | --- | --- | --- | --- | | | | ordinary | | | ordinary | | | | | shares as at | | | shares as at | | | | 30September | | | 13December | | | | Shareholder | | | 2024 % held | | | 2024 % held | Hargreaves Lansdown (Nominees) Limited 13,597,754 3.73 13,543,691 3.72 UBS Private Banking NomineesLtd 12,321,015 3.38 11,910,075 3.28 ### 41 Share buybacks and share price discount was calculated in accordance with the terms During the year, the Company repurchased and conditions of the DRIS on the basis of the 10,657,350 ordinary shares (nominal value £106,574) last reported NAV per share as at 5July 2024, to at a cost of £4,472,418. The repurchased shares Shareholders who elected to receive shares under represent 3.25% of the ordinary shares in issue the DRIS as an alternative to a cash payment of the on 1October 2023. All repurchased shares were interim dividend for the year ended 30September cancelled. As at 17December2024, a further 2024. 3,559,262ordinary shares (nominal value £35,593) Financial instruments have been purchased since the year end at a total The Company’s nancial instruments and principal cost of £1,361,156. risks are disclosed in note15 to the nancial The Directors believe that these share buybacks statements. are in the best interests of all Shareholders as they provide liquidity for Shareholders looking to realise VCT status monitoring their investment whilst ensuring the shares are The Company has appointed Philip Hare& bought back at a discount to the NAV to the longer- AssociatesLLP as advisers on, inter alia, compliance term benet of remaining Shareholders. with the VCT Rules. The Directors monitor the This policy is non-binding and at the discretion of the Company’s VCT status through regular reports from Board. Its operation depends on a range of factors Philip Hare& AssociatesLLP. including the Company’s liquidity, Shareholder permissions, market conditions and compliance with Auditors all laws and regulations. These factors may restrict A resolution proposing the reappointment of the eective operation of the policy and prevent the BDOLLP as auditors to the Company and authorising Company from achieving its objectives. the Directors to determine their remuneration will be proposed at the forthcoming AGM. Shares issued During the year, the Company issued 44,485,284 Greenhouse gas emissions ordinary shares of 1 penny (nominal value £444,853) As a UK quoted company, the Company would in the oer for subscription launched in the year ordinarily be required to report on its greenhouse ending September2023, representing 13.57% of the gas emissions. However, the Company outsources opening share capital at prices ranging from 44.80p all of its activities to third parties and does not to 47.10p per share. Gross funds of £20,321,529 were have any physical assets, property, employees or received. The 3.5% premium of £711,254 payable to operations. The Company has no direct greenhouse CGWL under the terms of the oer was reduced by gas emissions to report from its operations and £264,162, being the discount awarded to investors in is exempt from reporting under the Streamlined the form of additional shares. A further reduction of Energy and Carbon Reporting requirements. It is not £470 representing an introductory commission was required to report on any other emissions under the made resulting in fees payable to CGWL of £446,622 Companies Act2006 (Strategic Report and Directors’ which were used to pay other costs associated with Reports) Regulations 2013. the prospectus, relating to the oer, and marketing. | In accordance with the oer agreement, the | Amendments to the Articles of Association | | --- | --- | | Company was entitled to a rebate of £100,000 from | The Company’s Articles of Association may be | | CGWL reducing the net fees payable to CGWL to | amended by the members of the Company by special | | £346,622. | resolution (requiring a majority of at least 75% of the | persons voting on the relevant resolution). On 15February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence per share, At the Company’s General Meeting held on which was calculated in accordance with the terms 12November 2024, a resolution to adopt amended and conditions of the DRIS on the basis of the last Articles of Association which, provided that the reported NAV per share as at 26January 2024, to Company’s next continuation vote would be held Shareholders who elected to receive shares under the in 2031 rather than 2030, was passed, with 95.45% DRIS as an alternative to a cash payment of the nal votes in favour. dividend for the year ended 30September 2023. Post balance sheet events On 26July 2024, 2,235,192 ordinary shares were Post balance sheet events are disclosed in note17 to allotted at a price of 42.49pence per share, which the nancial statements on page90. ### 42 ## Future developments Consideration of the Company's future development and prospects are contained in the Chair's statement, long term viability statement and Investment Manager's report on pages 4 to 9, 23 and 28 to 31 respectively. ## Going concern The Company's business activities and the factors affecting its future development are set out in the Chair's statement on pages 4 to 9 and the Investment Manager's report on pages 28 to 31. The Company's principal and emerging risks are set out in the Strategic Report on pages 21 to 22. The Board receives regular reports from the Investment Manager and Administrator and reviews the financial position, performance and liquidity of the Company's investment portfolio. Revenue forecasts and expense budgets are prepared at the start of each financial year and performance against plan is reviewed by the Board. Cash forecasts are prepared and reviewed by the Board as part of the HMRC investment test compliance monitoring. The Directors have assessed the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of 12 months from the date these financial statements were approved. The Company has sufficient cash at bank, funds held with the Custodian (£4.8 million and £8.8 million respectively at 30 September 2024) and liquid assets held across a diversified portfolio of investments in listed companies to meet obligations as they fall due. The Company is a closed-ended fund, where assets are not required to be liquidated to meet day-to-day redemptions. The major driver of cash outflows (dividends, buybacks and investments) are managed in accordance with the Company's key policies at the discretion of the Board or, in the case of the Company's investments, the Investment Manager. The Board has reviewed forecasts and stress tests to assist them with their going concern assessment. These tests have included the modelling of a 15% reduction in NAV, whilst also considering ongoing compliance with the VCT investment test. It was concluded that in a plausible downside scenario the Company would continue to meet its liabilities. The Directors have carefully considered the principal risk factors facing the Company, as described on pages 21 to 22 and their potential impact on income into the portfolio and the NAV. The Directors are of the opinion that the Company has sufficient cash and other liquid assets to continue to operate as a going concern, including under a stress scenario. The Investment Manager has a team of five dedicated fund managers, analysts and a lawyer with multi-year experience working for the VCT. The Investment Manager and the Company's other key service providers have contingency plans in place to manage operational disruptions. The Directors have not identified any material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. Therefore, they are satisfied that the Company should continue to operate as a going concern and report its financial statements on that basis. ## Annual General Meeting Shareholders are invited to attend the Company's forthcoming AGM to be held at 12.30pm on 6 February 2025 at 88 Wood Street, London EC2V7QR. The Company's Notice of AGM is set out on pages 101 to 105 of this Annual Report. Shareholders who are unable to attend the AGM in person are invited to vote by proxy ahead of the AGM and submit any questions in writing to the Company Secretary at HHVCoSec@jicgroup.com (please include 'HHV AGM' in the subject heading) by 5.00pm on 30 January 2025. Answers will be published on the Company's website on 6 February 2025. Voting at the AGM will be conducted by way of a poll to ensure that each vote cast is counted. A proxy form for the AGM is enclosed separately with Shareholders' copies of this annual report. The proxy form permits Shareholders to disclose votes 'for', 'against' and 'withheld'. A vote 'withheld' is not a vote in law and will not be counted in the proportion of the votes for and against the resolution. Shareholders who wish to appoint a proxy are recommended to appoint the Chair of the AGM as their proxy. ## Resolutions being proposed at the AGM There are 14 resolutions being proposed at the forthcoming AGM, 12 as ordinary resolutions, including approval of the annual accounts and re-election of the Directors, and 2 resolutions as special resolutions, requiring a simple majority of 50 per cent and 75 per cent, respectively, of the votes cast in order for the resolutions to pass. ### Resolution 11 – Authority to implement any scrip dividend offer Ordinary resolution number 11 grants the Directors the necessary authority, in accordance with the terms of Article 29 of the Articles, to continue to 43 oer a scrip dividend alternative in respect of future is passed or at the conclusion of the next Annual dividends made or paid in the period ending at the General Meeting of the Company, whichever is earlier. conclusion of the Annual General Meeting to be Resolution14 – Purchase of own shares held in 2025. The Board believes that this continued authority oers the Company and its Shareholders Special resolution number 14 will request the a greater level of exibility in relation to dividend authority to purchase a maximum of 14.99per cent. payments. The appendix on pages 106 to 108 of of the Company’s issued ordinary share capital this document sets out a summary of key terms at the date of the passing of the resolution being and conditions of the Company’s scrip dividend approximately 55,062,233 as at the date of this | scheme.The full terms and conditions can be | document at or between the minimum and maximum | | --- | --- | | accessed viatheCompany’s website | prices specied in resolution 12. Shares bought | | (www.hargreaveaimvcts.co.uk) and are | back under this authority may be cancelled or held in | | available on request from the Registrar. | treasury. | The Board believes that it is helpful for the Company Resolution12 – Power to allot shares to continue to have the exibility to buy its own Ordinary resolution number 12 will request the shares and this resolution seeks authority from authority for the directors to allot up to an aggregate Shareholders to do so. The passing of this resolution nominal amount of £367,326 representing will replace and renew the buyback authority taken approximately 10per cent. of the total share capital at the Company's last Annual General Meeting. of the Company in issue (excluding treasury shares) During the nancial year under review, the Company as at the date of this document, generally from time purchased 10,657,350 ordinary shares which were to time or pursuant to Shareholders’ right to elect then cancelled. or participate in the DRIS operated by the Company The authority sought at the forthcoming AGM will in accordance with Article29 of the Articles. This expire 15months from the date this resolution is authority is in addition to any existing authorities. passed, or at the conclusion of the next Annual The authority sought at the forthcoming AGM will General Meeting of the Company, whichever is earlier. expire 15months from the date that this resolution is passed, or at the conclusion of the next Annual Recommendation General Meeting of the Company, whichever is earlier. The Directors believe that the passing of the Resolutions13 and 14 are being proposed as special resolutions above are in the best interests of the resolutions requiring the approval of at least 75per Company and its Shareholders as a whole and cent. of the votes cast at the AGM. unanimously recommend that Shareholders vote in favour of these resolutions, as they intend to Resolution13 – Disapplication of pre-emption in respect of their own benecial shareholdings rights amounting to 715,067 ordinary shares. Special resolution number 13 will request the By order of the Board authority for the Directors to allot equity securities for cash without rst being required to oer such securities to existing Shareholders. This will include the sale on a non pre-emptive basis of any shares the David Brock Company holds in treasury for cash. The authority Chair is limited to (i)an aggregate nominal amount of 17December2024 £183,663 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at the date of this document) pursuant to the DRIS operated by the Company and (ii)for allotments generally from time to time, an aggregate nominal amount of £183,663 (representing approximately 5per cent. of the issued share capital of the Company (excluding treasury shares) as at the date of this document). This authority is in addition to any existing authorities. The authority sought at the forthcoming AGM will expire 15months from the date that this resolution ### 44 # Directors' remuneration report ## For the year ended 30 September 2024 The Board presents this report which has been prepared in accordance with the requirements of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. Shareholders are encouraged to vote on the remuneration report annually at the Annual General Meeting and on the Company's remuneration policy at least every three years. Notwithstanding this, the Directors' policy is to put the remuneration policy to the vote of Shareholders at each Annual General Meeting. The Company's independent auditor is required to audit certain disclosures provided in this report. Where disclosures have been audited, they are indicated in this report. The auditor's opinion is included in their report on pages 63 to 70. ### Statement from the Chair of the Board in relation to Directors' remuneration matters The Board is mindful of its obligation to set remuneration at levels which attract and maintain an appropriate calibre of individuals whilst simultaneously protecting the interests of Shareholders. Following a review of the Board remuneration levels of the Company's peers and taking into account inflation, the Board has decided to increase its remuneration, effective 1 October 2024. As a result of the increases, the annual remuneration of the Chair will be £42,500, the independent non-executive directors will receive £33,000 and Oliver Bedford, who is not considered independent, will receive £30,500. An additional fee of £1,500 will continue to be paid to the Chair of the MSPEC and the Chair of the Audit Committee will continue to receive an additional fee of £3,000. ### Remuneration responsibilities As the Board consists entirely of non-executive directors it is considered appropriate that matters relating to remuneration are considered by the Board as a whole, rather than a separate remuneration committee. All Directors are considered independent with the exception of Oliver Bedford who is an employee of the Investment Manager and is not therefore independent. The remuneration policy is set by the Board, who consider the remuneration of each of the Directors and whether the remuneration policy is fair and in line with comparable VCTs and investment trusts. The Board deals with all matters relating to the Directors' remuneration and reporting thereon. ### Policy on Directors' remuneration The Company has no employees, so the Board's policy is that the remuneration of its Directors should be fair and reasonable in relation to the time commitment and responsibilities of the Directors and in line with the remuneration paid by other comparable listed VCTs and investment trusts. The Board aims to review Directors' remuneration from time to time. Fees for the Directors are determined by the Board within the limits stated in the Articles. The maximum permitted by the Articles is £250,000 per annum. The Directors are not eligible for bonuses, pension benefits, share options, other incentives or benefits. The Directors may be reimbursed for reasonable expenses incurred. The Directors do not receive payment on loss of office other than in lieu of notice period, if applicable. ### Director's terms of appointment It is the Board's policy that none of the Directors has a service contract. Each of the Directors has entered into an agreement with the Company when appointed. David Brock was appointed on 28 September 2010, Oliver Bedford on 13 December 2016, Angela Henderson on 29 October 2019, Justin Ward on 1 November 2020 and Busola Sodeinde and Megan McCracken on 1 June 2022. Either party can terminate the agreement by giving to the other at least three months' notice in writing. The terms of appointment provide that a Director shall retire and be subject to election at the first Annual General Meeting following their respective appointments. The Articles provide that a Director may retire at any Annual General Meeting following the Annual General Meeting at which he or she last retired and was re-elected provided that he or she must retire from office at or before the third Annual General Meeting following the Annual General Meeting at which he or she last retired and was re-elected. However, notwithstanding this, and in line with the provisions of the AIC Code, the Board agreed in July 2019 that all Directors will be subject to annual re-election at the AGM. ### Basis of remuneration All of the Directors are non-executive and considered to be independent with the exception of Oliver Bedford, who is not independent. It is not considered appropriate to relate any portion of their remuneration to the performance of the Company and therefore performance conditions have not been set in determining their level of remuneration. As the Company has no employees, it is not possible to take 45 account of the pay and employment conditions of the employees when determining the levels of the Directors’ remuneration. The following table shows the expected maximum payment that can be received per annum by each Director for the year to 30September 2025, together with a summary of the Company’s strategy and how this is supported by the current remuneration policy. Expected Fees for the year to | | Components | 30 September | | | Performance | | Remuneration | | --- | --- | --- | --- | --- | --- | --- | --- | | Director Role | of pay package | | | 2025 | Conditions Company Strategy | | Policy | | David Brock Chair | | | £42,500 | | | To generate | The levels of | | Oliver Bedford Director £30,500 | | | | | | capital gains and | remuneration are | | | | | | | | income from its | considered to be | Angela Henderson Director and Chair of (1) portfolio and make fair and reasonable the MSPEC £12,000 (2) distributions from in relation to the Megan McCracken Director £34,000 | | | | | capital or income to | time committed, | | --- | --- | --- | --- | --- | --- | | Busola Sodeinde Director £33,000 | Basic Salary | | N/A | | | | | | | | Shareholders whilst | responsibilities | | Justin Ward Director and Chair of | | £36,000 | | | | | | | | | maintaining its | of the Directors | the Audit Committee status as a Venture and in line with the Capital Trust remuneration paid by other VCTs and investment trusts (1) Angela Henderson will not seek re-election at the forthcoming AGM. Therefore her expected fee for the year to 30 September 2025 has been calculated on a pro-rata basis. (2) Megan McCracken will replace Angela Henderson as Chair of the MSPEC. The additional fee that Megan is entitled to as MSPEC Chair from the 2025 AGM has been calculated and included within the expected fee for the year 30 September 2025 on a pro-rata basis. Annual remuneration report The purpose of this report is to demonstrate the method by which the Board has implemented the Company’s remuneration policy and provide Shareholders with specic information in respect of the Directors’ remuneration. Under s.439 of the Companies Act2006, companies are required to ask shareholders to approve the annual remuneration paid to directors every year and to formally approve the directors’ remuneration policy every three years. However, the Board’s preferred approach is to put the remuneration policy to Shareholders annually for approval. Any change to the Directors’ remuneration policy will require Shareholder approval. As in prior years, the vote on the Directors’ remuneration report is an advisory vote, whilst the vote on the Directors’ remuneration policy is binding. Accordingly, ordinary resolutions will be put to Shareholders at the forthcoming AGM to be held on 6February 2025, to receive and adopt the Directors’ remuneration report and to receive and approve the Directors’ remuneration policy. At the Annual General Meeting held on 8February 2024, the following votes were cast on the Directors’ remuneration report and the remuneration policy: Votes Votes Votes for % for against % against Total votes cast withheld Remuneration report 14,147,293 90.14 1,548,285 9.86 14,147,293 478,536 Remuneration policy 13,827,588 88.56 1,786,973 11.44 13,827,588 559,553 Company performance The Company was incorporated on 16August 2004 and commenced trading on 29October 2004. The performance chart below plots the Company’s NAV total return (dividends reinvested) (rebased to 100) and share price total return (dividends reinvested) (rebased to 100) over the last 10years compared to the FTSE AIM All-Share Index Total Return over the same period (also calculated on a dividends reinvested basis). This index was chosen for comparison purposes as it represents the closest comparable equity market index. However, HMRC derived investment restrictions, along with Qualifying Investments in private companies and xed income securities and Non-Qualifying Investments in main market listed companies, predominantly in the FTSE350, mean the index is not a wholly comparable benchmark for performance. ### 46 Performance against the FTSE AIM All-Share Index Total Return 190.00 170.00 150.00 130.00 110.00 90.00 70.00 50.00 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 FTSE AIM All-Share Total Return Index NAV total return (dividends reinvested) Source: Bloomberg Directors’ emoluments for the year (audited) The total emoluments of each person who served as a Director during the year are set out in the table below. David Brock is entitled to a higher fee due to his role as Chair of the Board, Justin Ward is entitled to a higher fee due to his role as Chair of the Audit Committee and Angela Henderson is entitled to a higher fee due to her role as Chair of the MSPEC. | | | | 2024 | | | | | | | 2023 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2024 | | Taxable | | | 2024 | | 2023 | | Taxable | | | 2023 | | | Fees | | Expenses | | | Total | | Fees | | Expenses | | | Total | | | | £ | | | £ | | £ | | £ | | | £ | | £ | David Brock (Chair) 41,000 – 41,000 39,000 532 39,532 Oliver Bedford 29,500 – 29,500 28,000 – 28,000 Angela Henderson 33,500 – 33,500 32,000 – 32,000 Megan McCracken 32,000 71 32,071 30,500 – 30,500 Busola Sodeinde 32,000 – 32,000 30,500 – 30,500 Justin Ward 35,000 – 35,000 33,500 – 33,500 Total 203,000 71 203,071 193,500 532 194,032 210.00 Sep-24 ### 47 Share price total return (dividends reinvested) Directors’ annual percentage change in remuneration The increase in Directors’ remuneration over the last four years is set out in the table below. As the Company does not have any employees no comparisons are given for employees’ remuneration increases. Date appointed 2020-2021 2021-2022 2022-2023 2023-2024 (1) David Brock (Chair) 28 September 2010 11.9% 6.6% 6.9% 5.13% Oliver Bedford 13 December 2016 Nil Nil 7.2% 5.36% (2) Angela Henderson 29 October 2019 21.1% 7.6% 6.2% 4.69% (3) Megan McCracken 1 June 2022 N/A N /A 215.5% 4.92% (3) Busola Sodeinde 1 June 2022 N/A N /A 215.5% 4.92% (4) Justin Ward 1 November 2020 N/A 18.4% 5.8% 4.48% (1) David Brock’s annual % change 2020-2021 reects his fee increase following his appointment as Chair of the Board, eective February2020. (2) Angela Henderson received an additional £1,500 per annum with eect from 1January 2021 for her role as Chair of the Management and Service Provider Engagement Committee. (3) Megan McCracken and Busola Sodeinde were appointed with eect from 1June 2022 and their annual % change 2022- 2023 reects this. (4) Justin Ward’s annual % change 2021-2022 reects his fee increase following his appointment as Audit Chair in February 2021. Relative importance of spend on pay The table below compares Directors’ remuneration to Shareholder distributions (through dividend payments and share buybacks) in respect of the nancial year ended 30September 2024 and the preceding nancial year: | | Year ended | | | | Year ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 September | | | | 30 September | | | | | | | | | 2024 | | | | 2023 | | Growth | | | | | | £ | | | | £ | | % | (1) Directors’ remuneration 203,000 193,500 4.9 Dividends paid 14,268,141 15,717,501 -9.2 Share buybacks 4,472,418 3,636,841 23.0 (1) The gures above exclude employer’s National Insurance contributions. Within the nancial year, the Company paid interim and nal dividends totalling 2.50pence per share. The Company also paid a special dividend of 1.50pence per share on 26July 2024, taking the total cash distributions in the year to 4.00pence per share, a 20% decrease on the prior year. Including share buybacks, the Company returned £18.7million to Shareholders during the period under review. In light of the signicant time contributed by the independent non-executive Directors during the year, particularly from those with additional responsibilities as Chair of the Board and its sub committees, the Board agreed to a modest increase in the Directors’ remuneration for the year ending 30September 2025. Directors’ interests (audited) The Directors’ interests (including those of connected persons) in the issued share capital of the Company are outlined below. There is no minimum holding requirement that the Directors need to adhere to. Ordinary Shares Total holding at 30 September 30 September Acquired after 17 December 2023 2024 Year end 2024 David Brock 122,606 339,336 – 339,336 Oliver Bedford 167,790 297,890 – 297,890 Angela Henderson 8,223 9,000 – 9,000 Megan McCracken – – – – Busola Sodeinde – – – – Justin Ward 62,899 68,841 – 68,841 ### 48 Taxable benets The Directors who served during the year received no taxable benets in the year. Variable pay The Directors who served during the year received no variable pay relating to the performance of the Company in the year. Pension benets The Directors who served during the year received no pension benets in the year. Recruitment remuneration policy The remuneration levels are designed to reect the duties and responsibilities of the roles and the value of time spent in carrying these out. The Board will obtain independent advice on this where it considers it necessary. No such advice was taken during the year under review. This policy would be used when agreeing the remuneration of any new Director. Approval The Directors’ remuneration report on pages45 to49 was approved by the Board on 17December 2024 and will be further subject to an advisory vote at the forthcoming AGM being held on the 6February 2025. Signed on behalf of the Board. David Brock Chair 17December 2024 ### 49 ## Corporate governance ## For the year ended 30September 2024 Directors’ statement of compliance with the UK a high priority by the Board. The Board also has Corporate Governance Code and AIC Code a responsibility to consider the interests of its other key stakeholders. Please see the section 172 Introduction statement on pages17 to20 for further information. The Board recognises the importance of sound corporate governance and has chosen to comply with Management of conicts of interest the AIC Code. The Board believes that the Company In order to manage potential conicts of interest has complied with the principles and provisions of the Board requires that any conicts are declared the AIC Code in the period under review, with the at each meeting. A schedule of all the directorships exceptions of the items outlined below: held by Board members and Director shareholdings ● appointment of a senior independent director; in unquoted companies in which the Company has an ● interest is maintained by the Company Secretary and establishment of a separate nomination reviewed by the Board. Where a conict arises the committee; and Board will consider what is in the best interests of the ● establishment of a separate remuneration Company and whether the relevant Director’s ability committee. to act in accordance with his or her wider duties is For the reasons provided in the relevant sections aected. of this Corporate Governance Report, the Board considers these provisions are not relevant to the Director responsibilities size, structure and business of the Company and has The Directors have adopted a formal Schedule of therefore not reported in respect of these provisions. Matters Reserved for the Board which sets out the Copies of the AIC Code can be found on the AIC’s responsibilities of the Board, a copy of which is website:https://www.theaic.co.uk. available on the Company’s website. These matters include, but are not limited to: Board leadership and purpose ● approving strategic objectives and reviewing the The Board considers that the Company’s business Company’s strategy and investment policy to model remains attractive because of the potential ensure it is consistent with the objectives of the returns available from investing in small companies Company; and the advantageous VCT tax structure. The ● monitoring the performance of the Investment management of the investment portfolio has been Manager and other key service providers; delegated to the Investment Manager and, through ● changes to the Company’s structure and capital, regular meetings with the Investment Manager, the this includes capital raising and reductions, Board seeks to ensure that the portfolio is managed policy on share buybacks and the approval of in accordance with the agreed investment objectives any borrowing arrangements; and policy. The Company’s investment objectives | and policy are shown on pages11 to13, these were | ● | approval of all nancial statements and any | | --- | --- | --- | | reviewed during the year and deemed appropriate for | | signicant changes in accounting practices or | | the Company’s needs. The Board seeks to control risk | | policies; | by ensuring that appropriate policies and controls are ● ensuring the maintenance of a sound system of in place and by reviewing the Company’s risk matrix internal control and risk management; every six months and taking mitigating action where ● carrying out an annual review of the contracts in necessary. A summary of the principal and emerging place with key service providers and approving risks facing the Company is detailed on pages 21 to any other materially strategic contracts; 22. ● communication with Shareholders; The Board carries out an annual review of its own ● appointment and removal of the Company culture, practices and behaviour, the ndings from Secretary; which are considered by the Board and any actions required are monitored. ● determining the remuneration of the Chair and other directors subject to the Articles and Shareholder relations and relations with key Shareholder approval as appropriate; and stakeholders ● responsibility for all corporate governance The Directors have a duty to promote the success matters. of the Company for the benet of its members and communication with Shareholders is considered ### 50 The Directors have delegated the responsibility for Board Committees the day to day investment management decisions The Board has established an Audit Committee and of the Company to the Investment Manager. The MSPEC. The terms of reference for these committees provision of administration and custodian services are available on the Company’s website. were delegated to CGWL until 30September 2024. Due to the size, structure and business of the The administration services were novated from Company and the experience of its Board members, CGWL to CGAM with an eective date of 1October separate remuneration and nomination committees 2024. have not been established. These roles are instead The following tables set out the number of scheduled fullled by the Board as a whole. A statement from Board meetings, valuation meetings, Audit the Chair in relation to Directors’ remuneration Committee meetings and MSPEC meetings held matters is included in the Directors’ Remuneration during the year and the number of meetings attended Report on page 45. by each individual Director: Audit Committee Number of Scheduled Information regarding the composition, BoardMeetings responsibilities and activities of the Audit Committee Held Attended are detailed in the report of the Audit Committee on David Brock (Chair) 5 5 pages 56 to 58. During the year, no fees were paid Oliver Bedford 5 5 Angela Henderson 5 5 to the Company’s auditors for non-audit services Megan McCracken 5 5 (2023:nil). Busola Sodeinde 5 5 Justin Ward 5 5 Management and Service Provider Engagement Committee Approval of private | | company valuations | Information regarding the composition, | | --- | --- | --- | | Number of Board Meetings | | responsibilities and activities of the MSPEC are | | Held Attended | | detailed on page 59. | David Brock (Chair) 4 4 Board and Director independence Oliver Bedford 4 4 Angela Henderson 4 4 As at 30September 2024, the Board consisted of six Megan McCracken 4 4 directors, all of whom are non-executive. Busola Sodeinde 4 3 The Board considers that with, the exception Justin Ward 4 4 of Oliver Bedford, all of the Directors remain Number of Audit Meetings independent. David Brock, Chair of the Company, Held Attended has served on the Board for 14years since his initial Justin Ward (Chair) 3 3 appointment. The Board does not have a policy of Angela Henderson 3 3 restricting the term served by Directors to a xed Megan McCracken 3 3 time limit. As part of the Board evaluation process Busola Sodeinde 3 3 a rigorous review was carried out on the Chair’s Number of Management independence, without him present. The Directors and Service Provider concluded that, notwithstanding his tenure, David Engagement Meetings Brock is still considered to be independent given Held Attended that he was independent upon his appointment, Angela Henderson (Chair) 2 2 throughout his tenure there has been the absence David Brock 2 2 Megan McCracken 2 2 of connections with the Investment Manager or any Busola Sodeinde 2 2 other of the Company’s advisers, he does not have Justin Ward 2 2 any involvement in the day to day running of the Company and his experience and the range of skills The Board also held a number of ad-hoc meetings that he brings to the Board, including his constructive outside of the scheduled meeting cycle to meet challenge and support, continues to be benecial business needs. to the success of the Company. All new Directors are required to disclose other roles prior to their appointment and the Board requires that any new signicant additional external appointments receive prior Board approval. ### 51 Board induction and training Relationship with other service providers On appointment to the Board, Directors are fully The Company maintains a schedule of the contracts briefed as to their responsibilities and are kept that it has in place with its service providers (including regularly informed of industry and regulatory the Administrator, Company Secretary, Custodian developments. There is no formal training schedule in and Registrar) and the service provided by each is place. Directors’ training needs are identied as part monitored and reviewed by the MSPEC annually. of the Board evaluation process and addressed on a The Board has direct access to the Company case by case basis. Secretary, who is responsible for the timely delivery of relevant information and advising the Board on all Board meetings governance matters. JTC (UK) Limited was appointed The Administrator and the Company Secretary as Company Secretary on 15January 2021 and a ensure that the Directors have timely access to formal agreement detailing the responsibilities of the all relevant management, nancial and regulatory Company Secretary to the Company is in place. information to enable informed decisions to be made. The Board has access to independent professional The Board meets on a regular basis at least ve times advice from lawyers and tax advisers etc. This is each year, with additional meetings arranged as obtainable at the Company’s expense where the necessary. The Board continued to make eective Directors consider it necessary in order to be able to use of technology to enable it to operate eciently properly discharge their responsibilities. which included holding some meetings virtually and the use of electronic board packs. Board composition The primary focus at these meetings is the review of Due to the independent nature of the majority of its the Company’s investment performance, progress members, the Board does not consider it necessary against KPIs and corporate governance. to appoint a senior independent director. However, this will be kept under review. For the same reason, Relationship with the Investment Manager the Board has not established a separate nomination Both the Schedule of Matters Reserved for the Board committee and all nomination responsibilities are and the IMA with the Investment Manager clearly therefore carried out by the Board as a whole. These set out those areas of decision making over which responsibilities include reviewing the size, structure the Investment Manager has discretion. The Board’s and skills of the Board and considering any changes responsibility is to review the Company’s strategy necessary or new appointments. Directors are and investment policy to ensure it is consistent required to seek approval from the Board prior to with the objectives of the Company, and monitor taking on any new signicant external appointments. the performance and investment approach of the All Directors are subject to annual re-election. Investment Manager. The Board considers that due to their individual The Directors have delegated responsibility for day skills, experience and commitment the re-election to day investment management decisions to the of all Directors is merited. Angela Henderson will Investment Manager and a review of the investment not be standing for re-election and the remaining portfolio is carried out at each Board meeting. The Directors will oer themselves for re-election. Megan report produced by the Investment Manager includes McCracken will replace Angela as Chair of the MSPEC information on investment performance and fund following the 2025 AGM. positioning, benchmarking against both indices and David Brock is a highly experienced company director peers, liquidity analysis, cash management and deal with specic expertise directly relevant to investing in ow. private companies. A formal review of the Investment Manager was Oliver Bedford is the Lead Fund Manager to the carried out by the MSPEC in November2024. Company, has strong technical knowledge covering The Board, excluding the Investment Manager, the VCT Rulesand is an eective liaison between the accepted the Committee’s recommendation that Company and the Investment Manager. the continuing appointment of the Investment Megan McCracken is an experienced director and Manager was in the best interests of the Company brings cross sector knowledge from her executive and its Shareholders. Details of the contractual career. arrangements with the Investment Manager can be found on page 40. ### 52 Busola Sodeinde is a chartered accountant with considered to be independent given the absence of signicant regulatory and governance experience. connections with the Investment Manager, or any other of the Company’s advisers and, as a highly Justin Ward is a chartered accountant and has experienced company chair, is ideally suited to guide extensive experience in unquoted company the Board at a time when it is enacting its succession investment. plans. The role of the Chair In recent years the Board has successfully added The Chair leads the Board, and so is responsible new directors with complementary skills through for its eectiveness in directing the Company. the appointments of Megan McCracken and Busola By promoting a culture of openness and positive Sodeinde in June2022. Summary biographies of all debate, whilst demonstrating independent and the Directors can be found on page 40. objective judgement throughout his tenure, the Chair sets the tone for the Company and enhances the Board evaluation Board’s performance. The Chair encourages all non- The Directors recognise the importance of evaluating executive directors to make an eective contribution both the performance of the Board as a whole, to the Board and acts to facilitate constructive Board individual Directors as well as the Committees. relations. In conjunction with the Company Secretary, The annual Board evaluation is carried out by means the Chair ensures that the Directors receive accurate of a questionnaire which includes accountability and and clear information on a timely basis. eectiveness, culture, a Directors’ self-assessment and an appraisal of the Chair. Board succession A Board evaluation covering the year under review The Board’s policy for succession planning is that was carried out. Following this the Board is satised there should be forward-looking and detailed with the results and nds that the Board, the Chair succession and refreshment plans when proposing and the Directors are suitably qualied to undertake the re-election of long-serving members. Any their responsibilities, perform their duties in respect member of the Board who has served for nine years of managing the Company and that the Board culture will be subject to a particularly rigorous review and remains strong. evaluation process to determine whether they remain During the year, the Board also considered whether independent and should continue in their position. it was appropriate to have an externally facilitated Each Board member is subject to annual re-election Board evaluation. Following due consideration and at each Annual General Meeting of the Company. taking into account the satisfactory results of the Board tenure Board evaluation, this was not deemed necessary, but The Company has put in place a policy on the will be kept under review. tenure of its Board members (the Board Tenure and Risk and internal control Succession Planning Policy). The Board Tenure and The Directors acknowledge that they are responsible Succession Planning Policy states that the term the for the Company’s systems of internal nancial and Chair and other Directors serve on the Board should non-nancial controls. The controls are operating not be restricted to a xed time limit. eectively and continue to be in place up to the date The relevance of the individual length of service of of this report. The key components of this process the Chair and other Directors will be determined are as follows: on a case by case basis. In addition to the length ● day to day measures have been delegated to of service, consideration will be given to the the Investment Manager, Administrator and contribution and ongoing independence of the Custodian. Written agreements are in place individuals and the overall composition of the Board, which dene the roles and responsibilities of including the experience and range of skills of the these parties including the investment policy Directors. By adopting a rounded approach, the Board to be followed by the Investment Manager. The believes it is best placed, through careful succession Board receives regular reports to provide it with planning, to ensure that it has appropriate levels of assurance that appropriate oversight is in place. experience and diversity while introducing new Board Additionally, the Board receives and reviews the members as needed. annual internal control report published by its David Brock, Chair of the Company since Registrar; February2020, joined the Board in 2010. David is still ### 53 ● on a quarterly basis, amongst other things, the annual nancial report setting out whether it has met Board reviews the Company’s management the following targets on Board diversity: accounts, KPIs and investment reports provided a) at least 40% of individuals on the Board are by the Administrator and Investment Manager; women; ● annual and half-yearly reports and associated b) at least one of the senior Board positions announcements are reviewed and approved by (dened by the FCA as either the Chair, SID, CEO the Board prior to publication; or CFO) is held by a woman; and ● a detailed risk matrix is maintained, this c) at least one individual on the Board is from a identies each of the Company’s principal and minority ethnic background. emerging risks, assesses the potential impact The following tables set out the composition of and describes the controls in place to mitigate the Board as at 30 September 2024 and the date of those risks. A summary of the principal and this report. The information is based on voluntary emerging risks can be found in the Strategic self-declaration made by the Directors. Report on pages 21 to 22. The risk matrix is discussed regularly at Board and Audit Number of Committee meetings, thereby ensuring that senior positions Number on the Board the nature and extent of the risks facing the | | | | of Board | Percentage | (CEO, CFO, SID | | | --- | --- | --- | --- | --- | --- | --- | | | Company are being actively monitored; and | | members | of the Board | | and Chair) | | ● | | Men 3 50% | | | *Not applicable | | the Company’s internal policies are reviewed – see note.Women 3 50% on an annual basis, either by the Board or the Not specied/ Audit Committee. The Board has also reviewed prefer not to say – – – a summary of the range of risk management and internal controls it has in place to satisfy Number of itself that the overall system of controls remains senior positions Number on the Board appropriate. of Board Percentage (CEO, CFO, SID members of the Board and Chair) All of the Company’s management functions White British 5 83.33% *Not applicable are performed by the Investment Manager, the or other White – see note. Administrator and the Company Secretary, all of (including which have their own control systems in place. The minority-white groups) Board receives regular reports to provide it with Black/African/ 1 16.67% assurance that appropriate oversight is being applied Caribbean/Black and so has decided that the Company does not need British its own internal audit function. * The Company is externally managed, does not have executive The Board considers that the control systems in place management functions and specically does not have a CEO, CFO or SID. provide reasonable, but not absolute, assurance against material misstatement or loss, and manage, Remuneration rather than eliminate, the risk of failure to achieve As the Company has no employees, and the Board business objectives. wholly comprises non-executive Directors, the Board has not established a separate remuneration Diversity committee and all remuneration responsibilities are The Board has adopted a Diversity Policy and therefore carried out by the Board. The Company’s considers that a combination of skills, experience, disclosure with regard to remuneration is included on knowledge, independence, race, age, gender, pages 45 to 49. educational and professional background along with other relevant personal attributes provide the range Going concern of perspectives, insights and challenge needed to Under the AIC Code, the Board needs to consider support good decision making. whether it is appropriate to adopt the going concern As at 30September 2024, the Board comprised six basis of accounting in preparing these nancial non-executive directors, three male and three female statements. The Board continues to adopt the going (being 50% female representation). concern basis and the detailed consideration is In accordance with UK Listing Rule 6.6.6R 9, the contained on pages 43 to 44. Company is required to include a statement in the ### 54 Viability Statement The viability statement, under which the Directors assess the prospects of the Company over a longer period, is contained on page 23. Modern Slavery Statement As an investment company with no employees or customers and which does not provide goods or services in the normal course of business, the Company considers that it does not fall within the scope of the Modern Slavery Act2015 and it is not, therefore, obliged to make a human tracking statement. The Company’s own supply chain, which consists predominantly of professional advisers and service providers in the nancial services industry, is considered to be low risk in relation to this matter. Additional disclosures in the Directors’ Report Additional disclosures required by Schedule 7 of the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) are contained in the Directors’ Report on pages 41 to 44. For and on behalf of the Board. JTC (UK) Limited Company Secretary 17December 2024 ### 55 ## Report of the Audit Committee Composition of the Audit Committee Secretary to the Committee and representatives The Audit Committee consists of four independent of the Investment Manager as well as the non-executive directors at the year-end:Justin Ward Company’s external Auditor, BDO LLP, are also (Chair), Angela Henderson, Megan McCracken and invited to attend. The Committee’s terms of Busola Sodeinde. reference were reviewed during the year and are available on the Company’s website The Board conrms that, in line with the (www.hargreaveaimvcts.co.uk) and by request recommendations of the AIC Code, at least one from the Company Secretary. member of the Audit Committee has recent and relevant nancial experience. Justin Ward and Busola Activities during the year Sodeinde are both chartered accountants. Angela A summary of the Audit Committee’s principal Henderson and Megan McCracken have relevant activities and key considerations for the year to nancial experience and the Board is condent that 30September 2024 is provided below. the Committee as a whole has competence relevant to the sector in which the Company operates. Oliver Financial statements Bedford and David Brock are not members of the The interim and annual reports to Shareholders and Audit Committee due to their respective roles as the accounting policies therein were thoroughly Lead Fund Manager and Chair of the Board. reviewed by the Audit Committee prior to submission to the Board for approval. Duties of the Audit Committee The Committee carried out a going concern The main responsibilities of the Audit Committee are assessment, taking into account all reasonably as follows: available information about the future nancial ● to monitor the integrity of the Company’s prospects of the Company as well as the possible nancial statements including the interim outcomes of events and changes in conditions. reports, preliminary announcements and Following this assessment, the Audit Committee related formal statements before submission considered it was appropriate to adopt the going to and approval by the Board, paying particular concern basis of accounting and reviewed the going attention to: concern statement to ensure any signicant issues o critical accounting policies and practices were described in a concise and understandable form. and any changes in them; The Audit Committee also conducted a review of the viability statement and concluded that this was a fair o the clarity of disclosures; representation of the Company’s future prospects and that the period of the viability statement o compliance with accounting standards; and remained appropriate. The Audit Committee is of the view that the o compliance with stock exchange and other Annual Report, taken as a whole, is fair, balanced legal requirements. and understandable and provides the information ● to review the eectiveness of the Company’s necessary for Shareholders to assess the Company’s internal nancial control and risk management position and performance, business model and systems; strategy. ● to consider and make recommendations to the The Investment Manager and the Auditor Board on the appointment, reappointment and conrmed to the Audit Committee that they were removal of the external auditor; and not aware of any material misstatements to the ● nancial statements. Having reviewed the nancial to assess the independence and objectivity of statements and the report produced by the Auditor, the external auditors and the eectiveness of the Audit Committee was satised that key areas of the external audit process. The external auditor risks and judgement were appropriately addressed. is not engaged to supply any non-audit services. Risk and Internal Control Meetings The Board has identied the key risks faced by the The Committee met three times during the year Company and these are set out in the principal and to consider the annual and half-year reports emerging risks and uncertainties section on pages21 for the Company and review the audit plan. to22. The Audit Committee (and the Board as a The Company Secretary attends meetings as ### 56 whole) has received and reviewed periodic reports to the estimates and judgements made by the provide it with assurance that appropriate oversight Investment Manager when valuing the unlisted of controls is in place at its key third party providers companies and that the valuations proposed and to highlight instances of non-compliance. were acceptable. They further conrmed that there was no evidence of bias in the valuations The Audit Committee has sought and obtained of the investments based on the audit work assurance from the Investment Manager that performed. The Custodian provides the policies are in place covering whistleblowing and Company with quarterly reports conrming that to help prevent bribery, corruption and fraud. The reconciliations to check the safe custody of the Investment Manager has also conrmed that, during Company’s investments have been carried out. the nancial year, no instances of bribery, corruption Management accounts, including a full portfolio and fraud have been detected that would have listing, are considered at quarterly board impacted the Company. The Audit Committee has meetings; and received a summary of the Investment Manager’s approach to mitigating cyber security risks. ● Revenue recognition. The recognition of dividend and interest income is undertaken in The Board maintains a schedule of anti-fraud controls accordance with accounting policy note1 to the that is reviewed by the Audit Committee, and they nancial statements. Management accounts are satised that the Board have sucient oversight showing income received by the Company, and that adequate procedures are in place. and its categorisation, are reviewed by the Key areas of risk Board on a quarterly basis. The Committee also The key areas of risk identied by the Audit considered the Auditor’s review of this area Committee in relation to the business activities and and concluded that there were no issues which nancial statements of the Company are as follows: needed to be addressed. ● compliance with HMRC legislation to maintain Relationship with the external auditor the Company’s VCT status; The Audit Committee is responsible for overseeing ● valuation and safe custody of investments; and the relationship with the Auditor, assessing the ● revenue recognition. eectiveness of the external audit process and making recommendations on the appointment and These issues were discussed with the Investment removal of the Auditor, including the level of audit Manager during the year and with the Auditor, at the fees and terms of engagement. The Audit Committee time the Audit Committee reviewed and agreed the meets with the Auditor as part of the audit process. Auditor’s audit plan and when the Auditor presented | its ndings at the conclusion of its year-end audit. | The Audit Committee undertook a review of the | | --- | --- | | The Audit Committee concluded: | Auditor’s performance during the 2024 audit and | | ● | concluded that the Auditor: | Venture Capital Trust Status. The Investment Manager conrmed to the Audit Committee that ● provided a clear explanation of the audit plan, the conditions for maintaining the Company’s scope and strategy; status had been complied with throughout the ● met the agreed audit plan; year. The Company’s status is also reviewed ● was appropriately resourced with sound by the Company’s tax advisers Philip Hare& technical knowledge and demonstrated a clear AssociatesLLP and further half-yearly understanding of the business; reconciliations are carried out. These reports ● demonstrated a proactive approach to the are reviewed by the Board as a whole, which is planning process and engaged well with satised with the conclusions; the Audit Committee, Chair and other key ● Valuation and safe custody of investments. individuals within the business; The valuation of investments is undertaken ● responded to the Audit Committee’s questions in accordance with the accounting policies and handled key audit issues eectively; in note1 to the nancial statements. The Investment Manager has conrmed to the ● demonstrated that it had appropriate Audit Committee that the basis of valuation for procedures and safeguards in place to maintain unquoted investments was in accordance with its independence and objectivity; and industry guidelines. The Auditor conrmed to ● charged justiable fees in respect of the scope the Audit Committee that they had reviewed of services provided. ### 57 The Audit Committee is aware of the FRC’s conrmation that the Administrator, Custodian and Audit Quality Inspection and Supervision report Receiving Agent have carried out their relevant duties published in July 2024 relating to the inspection under the terms of their respective agreements with cycle 2023/2024, where concerns were raised about the Company. No compliance issues were reported the performance of BDO LLP. This was discussed during the year. in detail with the Auditor in a meeting of the Audit Committee and, particularly, the Committee sought assurance that none of the Company’s audits Justin Ward had been impacted by the matters raised in the Chair of the Audit Committee report. The Committee also sought assurance on the quality and consistency of future audits whilst 17December 2024 the Auditor implemented a remediation plan. The Committee received details on the improvement plan and was comfortable with the assurances given to their queries. The Committee was keen to keep the matter under review and the Auditor agreed to provide updates on the progress of the ongoing improvements. The Audit Committee concluded that it is satised with the standard of service received and that the re-appointment of the Auditor was in the best interest of the Company and its Shareholders and accordingly the Audit Committee has recommended to the Board that a resolution to re-appoint the Auditor is proposed to Shareholders at the forthcoming AGM. The Audit Committee undertook a tender process in 2017 in line with mandatory audit tendering legislation. In accordance with the FRC’s Ethical Standard for Auditors, rotation of the audit partner took place during the year. Subject to the Audit Committee continuing to be satised with the performance of the Auditor, the next statutory auditor rotation will take place in 2026, in line with legislative requirements for UK public entities and this is under review by the Audit Committee. Policy Reviews During the year, the Audit Committee conducted a review of certain Company policies and, where relevant, provided recommendations to the Board regarding the continued appropriateness of these policies. Minor changes were made to the policies throughout the year. Each policy is reviewed at least annually, and the Company Secretary maintains a record of when each policy is due for review by the Audit Committee or the Board. Compliance Control The Audit Committee receives a compliance control report on a quarterly basis, which details an operational update from the Administrator as well as ### 58 ## Report of the Management and ## Service Provider Engagement Committee Composition of the Management and Service Review of the Investment Manager Provider Engagement Committee The MSPEC reviewed the performance of the The MSPEC comprises all the independent Investment Manager during the year. The Investment non-executive directors and is chaired by Manager was asked to provide a report detailing the Angela Henderson. The MSPEC’s terms of Company’s performance against its key performance reference were reviewed during the year and indicators during the current year and previous years, are available on the Company’s website the contents of which were considered by the MSPEC (www.hargreaveaimvcts.co.uk) and by request as part of its review. The Company Secretary was from the Company Secretary. also invited to provide feedback on its experience of working with the Investment Manager. The views Duties of the Management and Service Provider of the MSPEC and the Company Secretary, which Engagement Committee were positive, were subsequently provided to the The duties of the MSPEC are to review the terms Investment Manager by the Chair of the MSPEC. of appointment and evaluate the performance of The MSPEC is satised that its queries and concerns the Investment Manager, review the performance have been adequately addressed throughout the and fees of the Administrator and other key service remainder of the year. providers of the Company and to decide whether it is Following the MSPEC’s recommendation, the Board in the best interests of Shareholders, to recommend concluded that the continuing appointment of the to the Board, that those appointments should Investment Manager was in the best interests of continue. The Auditor is not reviewed by the MSPEC Shareholders and the Company. as their appointment falls under the remit of the Audit Committee. Review of Key Service Providers The key areas of focus for the MSPEC are: The MSPEC reviewed the contractual terms, fees and ● monitoring and evaluating the performance of service levels from its other key service providers the Investment Manager; during the year. Each provider was asked to complete ● reviewing at least annually the performance of a questionnaire assessing its own performance the Investment Manager; and conrming it has complied with legislation and statutory requirements relating to its role. ● reviewing at least annually the terms of appointment of the Investment Manager The Investment Manager, Administrator and including but not limited to the level of fees and Company Secretary each provided feedback on their the notice period of the Investment Manager; experience of working alongside the other service and providers. This was generally positive, with some areas for improvement being identied and fed back ● reviewing the performance and fees of the other to each provider as appropriate. key service providers to the Company. Following a detailed review of the feedback and Meetings information provided, the MSPEC concluded it is The MSPEC met twice during the year to review satised that the service providers currently engaged the performance of the Investment Manager and by the Company are competent to carry out their other key service providers. The Company Secretary roles. attends meetings as Secretary to the MSPEC but takes no part in discussions relating to its own performance. The Investment Manager is also invited Angela Henderson to attend the meetings as appropriate, to provide its Chair of the MSPEC feedback on the Company’s service providers. 17December 2024 Activities during the year A summary of the MSPEC’s principal activities and key considerations for the year to 30September 2024 is provided below. ### 59 ## Statement of directors’ responsibilities ## in respect of the inancial statements The Directors are responsible for preparing the annual report and the nancial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the UK Listing Rulesof the Financial Conduct Authority. The Companies Act2006 (and related legislation) requires the Directors to prepare nancial statements for each nancial year. Under that law the Directors are required to prepare the nancial statements and have elected to prepare the company nancial statements in accordance with UKGAAP and the Directors must not approve the nancial statements unless they are satised that they give a true and fair view of the state of aairs of the Company and of the prot or loss for the Company for that period. In preparing these nancial statements, the Directors are required to: ● select suitable accounting policies and then apply them consistently; ● make judgements and accounting estimates that are reasonable and prudent; ● state whether they have been prepared in accordance with UKGAAP, subject to any material departures disclosed and explained in the nancial statements; ● prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and ● prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the requirements of the Companies Act2006. The Directors are responsible for keeping adequate accounting records that are sucient to show and explain the Company’s transactions, and disclose with reasonable accuracy at any time the nancial position of the Company, and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced and understandable, and provide the information necessary for Shareholders to assess the Company’s position and performance, business model and strategy. Website publication The Directors are responsible for ensuring the annual report and the nancial statements are made available on a website. The Company’s website address is https://www.hargreaveaimvcts.co.uk. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of nancial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the nancial statements contained therein. Directors’ responsibility statement pursuant to DTR4 Each of the Directors, David Brock (Chair), Oliver Bedford, Angela Henderson, Justin Ward, Megan McCracken and Busola Sodeinde, conrms to the best of their knowledge that: ● the nancial statements have been prepared in accordance with UKGAAP and give a true and fair view of the assets, liabilities, nancial position and prot and loss of the Company; and ● the annual report includes a fair review of the development and performance of the business and the nancial position of the Company, together with a description of the principal risks and uncertainties that it faces. ### 60 Disclosure of information to the Auditor The Directors conrm that: ● so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and ● the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Auditor is aware of that information. For and on behalf of the Board. David Brock Chair 17December 2024 ### 61 ## Financial statements ### 62 ## Independent auditor’s report to the members ## of Hargreave Hale AIM VCTPLC Opinion on the nancial statements requirements. The non-audit services prohibited by In our opinion the nancial statements: that standard were not provided to the Company. ● give a true and fair view of the state of the Conclusions relating to going concern Company’s aairs as at 30 September 2024 and In auditing the nancial statements of the Company, of its loss for the year then ended; we have concluded that the Directors’ use of the ● have been properly prepared in accordance with going concern basis of accounting in the preparation United Kingdom Generally Accepted Accounting of the nancial statements is appropriate. Practice; and Our evaluation of the Directors’ assessment of the ● have been prepared in accordance with the Company’s ability to continue to adopt the going requirements of the Companies Act 2006. concern basis of accounting included: We have audited the nancial statements of ● obtaining the VCT compliance reports during Hargreave Hale AIM VCT PLC (the “Company”) for the the year and as at year end and reviewing the year ended 30 September 2024 which comprise the calculations therein to check that the Company Income statement, the Balance sheet, the Statement was meeting its requirements to retain VCT of changes in equity, the Statement of cash ows status; and Notes to the nancial statements, including a ● consideration of the Company’s expected future summary of signicant accounting policies. compliance with VCT legislation, the absence of The nancial reporting framework that has been bank debt, contingencies and commitments and applied in their preparation is applicable law and any market or reputational risks; United Kingdom Accounting Standards, including ● reviewing the forecasted cash ows that Financial Reporting Standard 102, The Financial support the Directors’ assessment of Reporting Standard applicable in the UK and Republic going concern, challenging assumptions of Ireland (United Kingdom Generally Accepted and judgements made in the forecasts Accounting Practice). and assessing them for reasonableness. In particular, we considered the available cash Basis for opinion resources relative to the forecast expenditure We conducted our audit in accordance with which was assessed against the prior year for International Standards on Auditing (UK) (ISAs (UK)) reasonableness; and and applicable law. Our responsibilities under those ● evaluating the Directors’ method of assessing standards are further described in the Auditor’s responsibilities for the audit of the nancial the going concern in light of market conditions. statements section of our report. We believe that Based on the work we have performed, we have the audit evidence we have obtained is sucient and not identied any material uncertainties relating to appropriate to provide a basis for our opinion. Our events or conditions that, individually or collectively, audit opinion is consistent with the additional report may cast signicant doubt on the Company’s ability to the Audit Committee. to continue as a going concern for a period of at least twelve months from when the nancial statements Independence are authorised for issue. Following the recommendation of the Audit In relation to the Company’s reporting on how it has Committee, we were appointed by the Board of applied the UK Corporate Governance Code, we Directors in January 2007 to audit the nancial have nothing material to add or draw attention to in statements for the year ended 30 September 2007 relation to the Directors’ statement in the nancial and subsequent nancial periods. The period of total statements about whether the Directors considered uninterrupted engagement including re-tenders and it appropriate to adopt the going concern basis of reappointments is 18 years, covering the years ended accounting. 30 September 2007 to 30 September 2024. We Our responsibilities and the responsibilities of the remain independent of the Company in accordance Directors with respect to going concern are described with the ethical requirements that are relevant to our in the relevant sections of this report. audit of the nancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fullled our other ethical responsibilities in accordance with these ### 63 Overview 2024 2023 Key audit matters Valuation and ownership of investments ✓ ✓ Company nancial statements as a whole Materiality £1,350,000 (2023: £1,330,000) based on 1% of adjusted net assets. An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the nancial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit of the nancial statements of the current period and include the most signicant assessed risks of material misstatement (whether or not due to fraud) that we identied, including those which had the greatest eect on: the overall audit strategy, the allocation of resources in the audit, and directing the eorts of the engagement team. These matters were addressed in the context of our audit of the nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership The investment portfolio We assessed the design and implementation of of investments comprises quoted, unit controls in relation to the valuation of investments. trust fund and unquoted (Note 1 and Note In respect of quoted investments, we responded investments held at fair 7 to the nancial to this matter by testing 100% of the valuation and value through prot and statements) ownership of the portfolio. loss. We performed the following procedures: Quoted and unit trust ● Conrmed the year end bid price was used by fund investments total agreeing to externally quoted prices; £120.5 million (90%) ● Assessed if there were contra indicators, such of the investment as liquidity considerations, to suggest bid price portfolio and unquoted is not the most appropriate indication of fair investments make up value by considering the realisation period for £13.7 million (10%). individual holdings; We considered the ● Recalculated the valuation by multiplying the valuation and ownership number of shares held per the statement of investments to be the obtained from the Custodian by the valuation most signicant audit per share; and area as investments represent the most ● Obtained direct conrmation from the signicant balance in the custodian and agreed all investments held at the Financial Statements and balance sheet date to CREST records. underpin the principal activity of the entity. ### 64 Key audit matter How the scope of our audit addressed the key audit matter | Valuation and ownership | Whilst we do not | We assessed the valuation and ownership of the | | --- | --- | --- | | of investments (Note1 | consider the valuation of | unquoted investment portfolio that constitutes the | | and Note7 to the | the listed investments to | year-end unquoted investments balance, performing | | nancial statements) | be subject to a signicant | the following procedures: | | | degree of estimation or | ● | Challenged whether the valuation methodology judgement, there is a was the most appropriate in the circumstances risk that the prices used under the IPEV Guidelines and the applicable by the Company are not accounting standards. reective of the fair value ● Obtained capital tables directly from the of those investments as investee companies to conrm the ownership at at the year end. year end and recalculated the value attributable The unlisted investments to the Company, having regard to the application have signicant of enterprise value across the capital structures judgement involved in of the investee companies; selecting a valuation ● Challenged and corroborated the inputs to methodology and the valuation with reference to management signicant estimation information of investee companies, market data uncertainty involved and our own understanding and assessed the in determining their impact of the estimation uncertainty concerning valuations. these assumptions and the disclosure of these There is an inherent uncertainties in the nancial statements; risk of management ● Reviewed the historical nancial statements and override arising any recent management information available from the unquoted to support assumptions about maintainable investment valuations revenues used in the valuation; being prepared by the ● Considered the multiples applied and the Investment Manager, discounts applied by reference to observable who is remunerated listed company market data; based on a percentage | of the value of the net | ● | Challenged the consistency and | | --- | --- | --- | | assets of the fund, as | | appropriateness of adjustments made to | | shown in note 3 | | such market data in establishing the multiple | applied in arriving at the valuations adopted, For these reasons and by considering the individual performance of the materiality of the investee companies against plan and relative balance in relation to the to the peer group, the market and sector in Financial Statements as which the investee company operates and other a whole, we considered factors as appropriate; this to be a key audit matter. ● Challenged assumptions made in respect of the probability weighted average methodology applied to convertible loan note scenarios for example assessing the likelihood of early redemption, redemption at maturity, assumptions made in respect of sale and prot forecasts and recalculating the value of the convertible instrument; and ### 65 Key audit matter How the scope of our audit addressed the key audit matter | Valuation and ownership | ● | Where appropriate, we performed a sensitivity | | --- | --- | --- | | of investments (Note1 | | analysis by developing our own point estimate | | and Note7 to the | | where we considered that alternative input | | nancial statements) | | assumptions could reasonably have been | applied and we considered the overall impact of such sensitivities on the portfolio of investments in determining whether the valuations as a whole are reasonable and free from bias. Key Observations: Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of investments was not appropriate and we are satised that the estimates and judgements made in the unquoted investment valuations are appropriate considering the level of estimation uncertainty. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the eect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could inuence the economic decisions of reasonable users that are taken on the basis of the nancial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identied misstatements, and the particular circumstances of their occurrence, when evaluating their eect on the nancial statements as a whole. Based on our professional judgement, we determined materiality for the nancial statements as a whole and performance materiality as follows: Company Financial statements 2024 2023 £ £ Materiality 1,350,000 1,330,000 Basis for determining materiality 1% of net assets adjusted to exclude funds raised during the year Rationale for the benchmark In setting materiality, we have had regard to the nature and disposition applied of the investment portfolio. The Company’s portfolio mainly comprises quoted investments, which are considered low risk. Since the portfolio is low risk where fair values are highly visible, we have applied a percentage of 1% of adjusted net asset value. An adjusted benchmark was used to exclude the eects of cash that has been raised from fundraising during the year. Performance materiality 1,012,000 1,000,000 Basis for determining 75% of materiality performance materiality Rationale for the percentage The level of performance materiality applied was set after having applied for performance considered a number of factors including the expected total value of materiality known and likely misstatements and the level of transactions in the year. ### 66 Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of £27,000 (2023: £26,000). We also agreed to report dierences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the nancial statements and our Auditor’s report thereon. Our opinion on the nancial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the nancial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the nancial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The UK Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specied for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the nancial statements or our knowledge obtained during the audit. Going concern and longer-term ● The Directors’ statement with regards to the appropriateness of viability adopting the going concern basis of accounting and any material uncertainties identied set out on page 43; and ● The Directors’ explanation as to their assessment of the Company’sprospects, the period this assessment covers and why the period is appropriate set out on page 23. Other Code provisions ● Directors’ statement on fair, balanced and understandable set out on page 60; ● Board’s conrmation that it has carried out a robust assessment ofthe emerging and principal risks set out on page 23; ● The section of the annual report that describes the review of eectiveness of risk management and internal control systems set out on page 21; and ● The section describing the work of the Audit Committee set out onpage 56. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. ### 67 Strategic report and Directors’ In our opinion, based on the work undertaken in the course of the audit: report ● the information given in the Strategic report and the Directors’ report for the nancial year for which the nancial statements are prepared is consistent with the nancial statements; and ● the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identied material misstatements in the Strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our to report by exception opinion: ● adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ● the nancial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or ● certain disclosures of Directors’ remuneration specied by law are not made; or ● we have not received all the information and explanations we require for our audit. Responsibilities of Directors Auditor’s responsibilities for the audit of the nancial statements As explained more fully in the Directors’ responsibilities statement, the Directors are Our objectives are to obtain reasonable assurance responsible for the preparation of the nancial about whether the nancial statements as a whole statements and for being satised that they give a are free from material misstatement, whether due true and fair view, and for such internal control as to fraud or error, and to issue an Auditor’s report the Directors determine is necessary to enable the that includes our opinion. Reasonable assurance is preparation of nancial statements that are free from a high level of assurance, but is not a guarantee that material misstatement, whether due to fraud or error. an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. In preparing the nancial statements, the Directors Misstatements can arise from fraud or error and are are responsible for assessing the Company’s ability to considered material if, individually or in the aggregate, continue as a going concern, disclosing, as applicable, they could reasonably be expected to inuence the matters related to going concern and using the going economic decisions of users taken on the basis of concern basis of accounting unless the Directors these nancial statements. either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do Extent to which the audit was capable of detecting so. irregularities, including fraud Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: ### 68 Non-compliance with laws and regulations ● Discussion amongst the engagement team Based on: as to how and where fraud might occur in the nancial statements. ● our understanding of the Company and the industry in which it operates; Based on our risk assessment, we considered the areas most susceptible to be management ● discussion with management and those charged override of controls and the valuation of unquoted with governance; and investments. ● obtaining an understanding of the Company’s Our procedures in respect of the above included: policies and procedures regarding compliance ● The procedures set out in the Key Audit Matters with laws and regulations, section above relating to valuation of the we considered the signicant laws and regulations unquoted investments; to be Companies Act 2006, the UK Listing Rules and ● Review of estimates and judgements applied Disclosure Guidance and Transparency Rules, the principles of the UK Corporate Governance Code, by management in the nancial statements to industry practice represented by the SORP and the assess their appropriateness and the existence applicable nancial reporting framework. We also of any systematic bias; considered the Company’s qualication as a VCT ● Review and consideration of the under UK tax legislation. appropriateness of adjustments made in the Our procedures in respect of the above included: preparation of the nancial statements; and ● ● Review of unadjusted audit dierences, if any, for agreement of the nancial statement disclosures to underlying supporting indications of bias or deliberate misstatement. documentation; We also communicated relevant identied laws ● enquiries of management and those charged and regulations and potential fraud risks to all with governance relating to the existence of any engagement team members who were all deemed to non-compliance with laws and regulations; have appropriate competence and capabilities and remained alert to any indications of fraud or non- ● reviewing minutes of meeting of those charged compliance with laws and regulations throughout the with governance throughout the period for audit. instances of non-compliance with laws and regulations; and Our audit procedures were designed to respond to risks of material misstatement in the nancial ● obtaining the VCT compliance reports during statements, recognising that the risk of not detecting the year and as at year end and reviewing their a material misstatement due to fraud is higher than calculations to check that the Company was the risk of not detecting one resulting from error, meeting its requirements to retain VCT status. as fraud may involve deliberate concealment by, for Fraud example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit We assessed the susceptibility of the nancial procedures performed and the further removed statement to material misstatement including fraud. non-compliance with laws and regulations is from Our risk assessment procedures included: the events and transactions reected in the nancial ● Enquiry with management and those charged statements, the less likely we are to become aware with governance regarding any known or of it. suspected instances of fraud; A further description of our responsibilities is ● Obtaining an understanding of the Company’s available on the Financial Reporting Council’s website policies and procedures relating to: at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s report. o Detecting and responding to the risks of fraud; and Use of our report This report is made solely to the Company’s o Internal controls established to mitigate members, as a body, in accordance with Chapter3 risks related to fraud; of Part 16 of the Companies Act 2006. Our audit ● Review of minutes of meeting of those charged work has been undertaken so that we might state with governance for any known or suspected to the Company’s members those matters we are instances of fraud; and required to state to them in an Auditor’s report and ### 69 for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Elizabeth Hooper (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, UK 17 December 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). ### 70 # Income statement | | Note | Year to 31 September 2024 | | | Year to 31 September 2023 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £000 | Capital £000 | Total £000 | Revenue £000 | Capital £000 | Total £000 | | Net loss on investments held at fair value through profit or loss | 7 | – | (5,341) | (5,341) | – | (28,455) | (28,455) | | Income | 2 | 2,849 | – | 2,849 | 2,616 | – | 2,616 | | | | 2,849 | (5,341) | (2,492) | 2,616 | (28,455) | (25,839) | | Management fee | 3 | (641) | (1,924) | (2,565) | (699) | (2,098) | (2,797) | | Other expenses | 4 | (1,485) | (43) | (1,528) | (1,052) | (39) | (1,091) | | | | (2,126) | (1,967) | (4,093) | (1,751) | (2,137) | (3,888) | | Profit/(loss) on ordinary activities before taxation | | 723 | (7,308) | (6,585) | 865 | (30,592) | (29,727) | | Taxation | 5 | – | – | – | – | – | – | | Profit/(loss) after taxation | | 723 | (7,308) | (6,585) | 865 | (30,592) | (29,727) | | **Basic and diluted earnings/(loss) per share** | 6 | **0.20p** | **(2.06)p** | **(1.86)p** | **0.27p** | **(9.59)p** | **(9.32)p** | The total column of these statements is the income statement of the Company. All revenue and capital items in the above statements derive from continuing operations. There was no other comprehensive income other than the loss for the year. The accompanying notes are an integral part of these financial statements. 71 # Balance sheet As at 30 September 2024 Company Registration Number 5206425 (In England and Wales) | | Note | 2024 £000 | 2023 £000 | | --- | --- | --- | --- | | **Fixed assets** | | | | | Investments at fair value through profit or loss | 7 | 134,277 | 132,120 | | **Current assets** | | | | | Debtors | 9 | 1,047 | 1,475 | | Funds held with Custodian ^{(1)} | 15 | 8,846 | 8,119 | | Cash at bank and in hand ^{(1)} | | 4,766 | 11,112 | | | | 14,659 | 20,706 | | Creditors: Amounts falling due within one year | 10 | (927) | (906) | | **Net current assets** | | 13,732 | 19,800 | | **Total assets less current liabilities** | | 148,009 | 151,920 | | **Capital and Reserves** | | | | | Called up share capital | 11 | 3,649 | 3,278 | | Share premium | | 21,222 | 286 | | Capital redemption reserve | | 379 | 272 | | Capital reserve – unrealised | | 16,046 | 13,640 | | Special reserve | | 159,022 | 177,762 | | Capital reserve – realised | | (50,785) | (41,071) | | Revenue reserve | | (1,524) | (2,247) | | **Total Shareholders' funds** | | 148,009 | 151,920 | | **Net asset value per share (basic and diluted)** | 12 | 40.55p | 46.34p | (1) Cash at bank and in hand in the Balance Sheet has been restated to show separately Funds held with Custodian for the year ended 30 September 2023, to conform with the requirements of the Companies Act 2006 – Statutory format of the Balance Sheet. There is no impact on other line items in the Balance Sheet nor the total net current assets. The accompanying notes are an integral part of these financial statements. These financial statements were approved and authorised for issue by the Board of Directors on 17 December 2024 and signed on its behalf by **David Brock** Chair 17 December 2024 72 ## Statement of changes in equity For the year ending 30 September 2024 (1) Non-distributable reserves Distributable reserves | | | | | | Capital | | Capital | | Capital | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | | Share | Redemption | | | Reserve | Special | Reserve | Revenue | | | | | Capital | Premium | | | Reserve | Unrealised | | Reserve | Realised | Reserve | | Total | | Note | £000 | | £000 | | £000 | | £000 | £000 | £000 | | £000 | £000 | At 1October 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920 Prot and total comprehensive income for the year Realised (losses) on investments 7 – – – – – (3,570) – (3,570) Unrealised (losses) on investments 7 – – – (1,771) – – – (1,771) Management fee charged to capital 3 – – – – – (1,924) – (1,924) Transaction costs charged to capital – – – – – (33) – (33) Income allocated to capital 2 – – – – – – – – Due diligence investments costs 4 – – – – – (10) – (10) Revenue prot after taxation for the year – – – – – – 723 723 Total (loss) after taxation for the year – – – (1,771) – (5,537) 723 (6,585) Contributions by and distributions to owners Subscription share issues 11 445 19,876 – – – – – 20,321 Issue costs 11 – (347) – – – – – (347) Share buybacks 11 (107) – 107 – (4,472) – – (4,472) DRIS share issues 11 33 1,407 – – – – – 1,440 Equity dividends paid 16 – – – – (14,268) – – (14,268) Total contributions by and distributions to owners 371 20,936 107 – (18,740) – – 2,674 Other movements Capital reduction 11 – – – – – – – – Diminution in value – – – 4,177 – (4,177) – – Total other movements At 30September 2024 3,649 21,222 379 16,046 159,022 (50,785) (1,524) 148,009 Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30September 2024 were £106.6million, adjusted to remove £0.1million accumulation income included in the revenue reserve but not distributable (2023:£134.4million). The accompanying notesare an integral part of these nancial statements. (1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30September 2024, £108.9million of the special reserve is subject to this restriction. ### 73 ## Statement of changes in equity For the year ending 30 September 2023 (1) Non-distributable reserves Distributable reserves | | | | | | Capital | | Capital | | Capital | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | | Share | Redemption | | | Reserve | Special | Reserve | Revenue | | | | | Capital | Premium | | | Reserve | Unrealised | | Reserve | Realised | Reserve | | Total | | Note | £000 | | £000 | | £000 | | £000 | £000 | £000 | | £000 | £000 | At 1October 2022 2,666 93,660 201 23,935 63,931 (20,774) (3,112) 160,507 Prot and total comprehensive income for the year Realised (losses) on investments 7 – – – – – (8,245) – (8,245) Unrealised (losses) on investments 7 – – – (20,210) – – – (20,210) Management fee charged to capital 3 – – – – – (2,098) – (2,098) Income allocated to capital 2 – – – – – – – – Due diligence investments costs 4 – – – – – (39) – (39) Revenue prot after taxation for the year – – – – – – 865 865 Total (loss) after taxation for the year – – – (20,210) – (10,382) 865 (29,727) Contributions by and distributions to owners Subscription share issues 11 659 39,277 – – – – – 39,936 Issue costs 11 – (742) – – – – – (742) Share buybacks 11 (71) – 71 – (3,637) – – (3,637) DRIS share issues 11 24 1,276 – – – – – 1,300 Equity dividends paid 16 – – – – (15,717) – – (15,717) Total contributions by and distributions to owners 612 39,811 71 – (19,354) – – 21,140 Other movements Capital reduction 11 – (133,185) – – 133,185 – – – Diminution in value – – – 9,915 – (9,915) – – Total other movements At 30September 2023 3,278 286 272 13,640 177,762 (41,071) (2,247) 151,920 Reserves available for distribution are capital reserve realised, special reserve and revenue reserve. Total distributable reserves at 30September 2023 were £134.4million following the capital reduction of £133.2m (2022:£40million). The accompanying notesare an integral part of these nancial statements. (1) The Income Taxes Act2007 restricts distribution of capital from reserves created by the conversion of the share premium account into a special (distributable) reserve until the third anniversary of the share allotment that led to the creation of that part of the share premium account. As at 30September 2023, £108.9million of the special reserve is subject to this restriction. ### 74 # Statement of cash flows | | Note | 2024 £000 | 2023 £000 | | --- | --- | --- | --- | | Total loss on ordinary activities before taxation | | (6,585) | (29,727) | | Realised losses on investments | 7 | 3,570 | 8,245 | | Unrealised losses on investments | 7 | 1,771 | 20,210 | | Decrease/(increase) in debtors | | 428 | (1,067) | | Increase/(decrease) in creditors | | 21 | (94) | | Amortisation for discount/premium on bonds | | (129) | (24) | | Unclaimed dividend forfeiture | | 4 | – | | Non-cash distributions | 2 | (143) | – | | Net cash (outflow) from operating activities ^{(1)} | | (1,063) | (2,457) | | Purchase of investments | 7 | (27,582) | (57,699) | | Sale of investments | 7 | 20,356 | 16,336 | | **Net cash (used in) investing activities** | | **(7,226)** | **(41,363)** | | Share buybacks | 11 | (4,472) | (3,637) | | Issue of share capital | 11 | 20,321 | 39,936 | | Issue costs | 11 | (347) | (742) | | Dividends paid | 16 | (12,832) | (14,417) | | Net cash provided by financing activities | | 2,670 | 21,140 | | **Net (decrease) in cash and cash equivalents** | | **(5,619)** | **(22,680)** | | Opening cash and cash equivalents ^{(2)} | | 19,231 | 41,911 | | Closing cash and cash equivalents ^{(3)} | | 13,612 | 19,231 | $^{(1)}$ The Company received cash dividends of £977,491 (2023: £1,178,059) and interest of £1,711,217 (2023: £599,735). $^{(2)}$ The opening cash and cash equivalents includes £8,119,302 (2023: £16,786,442) of funds held with Custodian. $^{(3)}$ The closing cash and cash equivalents includes £8,845,455 (2023: £8,119,302) of funds held with Custodian. The accompanying notes are an integral part of these financial statements. 75 ## Notes to the inancial statements Hargreave Hale AIM VCTplc is a company contingency plans in place to manage operational incorporated in England and Wales under the disruptions. The Directors have not identied any Companies Act2006. The address of the registered material uncertainties related to events or conditions oce is given in the company information on page that may cast signicant doubt about the ability 100 and the nature and principal business activities of the Company to continue as a going concern. are set out in the Strategic Report. Therefore, they are satised that the Company should continue to operate as a going concern and Basis of preparation report its nancial statements on that basis. The nancial statements have been prepared in accordance with UKGAAP, including FRS102 and with Key judgements and estimates the Companies Act2006 and the SORP. The preparation of the nancial statements requires the Board to make judgements and estimates Going Concern that aect the application of policies and reported The nancial statements have been prepared on amounts of assets, liabilities, income and expenses. a going concern basis and on the basis that the The most critical judgements and estimates mainly company maintains its VCT status. relate to the determination of the fair valuation of The Directors have assessed the Company’s ability unquoted investments. The policies for these are set to continue as a going concern and are satised that out in the notesto the nancial statements. The IPEV the Company has adequate resources to continue in Guidelines describe a range of valuation techniques, operational existence for a period of 12months from as described in the “nancial instruments” section on the date these nancial statements were approved. pages 87 to 89. The Company has sucient cash at bank, funds The nature of estimation means that the actual held with Custodian (£4.8 million and £8.8 million outcomes could dier from those estimates. respectively at 30 September 2024) and liquid assets Estimates and underlying assumptions are under held across a diversied portfolio of investments in continuous review with particular attention paid to listed companies to meet obligations as they fall due. the carrying value of the investments. The Company is a closed-ended fund, where assets Key judgements when determining the fair value of are not required to be liquidated to meet day-to- unquoted investments include: day redemptions. The major driver of cash outows ● selecting risk factors to include in the valuation (dividends, buybacks and investments) are managed model; in accordance with the Company’s key policies at ● peer group selection; and the discretion of the Board or, in the case of the ● loan noteconversion scenarios. Company’s investments, the Investment Manager. Key estimates involved in determining the fair value The Board has reviewed forecasts and stress tests of unquoted investments include: to assist them with their going concern assessment. These tests have included the modelling of a 15% ● forecast compliance within the appropriate reduction in NAV, whilst also considering ongoing nancial metric; compliance with the VCT investment test. It was ● future working capital requirements; concluded that in a plausible downside scenario the ● liquidity risk; Company would continue to meet its liabilities. ● determining the appropriate discount to apply to The Directors have carefully considered the principal peer group selection; and risk factors facing the Company, as described on ● the probabilities applied to the loan note pages 21 to 22 and their potential impact on income conversion scenarios. into the portfolio and the NAV. The Directors are of the opinion that the Company has sucient cash and Further areas requiring judgement are the other liquid assets to continue to operate as a going allocation of income and expenses, recognition concern, including under a stress scenario. and classication of unusual or special dividends as either capital or revenue in nature, the permanent The Investment Manager has a team of four impairment of investments and categorisation of dedicated fund managers and analysts with multi- public companies between level 1 and level 2 of the year experience working for the VCT and one fair value hierarchy. dedicated legal counsel. The Investment Manager and the Company’s other key service providers have ### 76 1. Accounting policies Purchases and sales of unlisted investments are A summary of the principal accounting policies, all of recognised when the contract for acquisition or which have been applied consistently throughout the sale becomes unconditional. Until 30September year, is set out below: 2023, transaction costs were included in the initial cost or deducted from the disposals proceeds Financial instruments of investments. However, from 1October 2023 All investments are classied as fair value through transaction costs in relation to the purchase or sale prot or loss. Investments are measured initially of investments have been recognised as a capital and subsequently at fair value which is deemed expense. to be market bid prices for listed investments and These investments will be managed and their investments traded on AIM. Unquoted investments performance evaluated on a fair value basis in are valued using the most appropriate methodology accordance with a documented investment strategy recommended by the IPEV Guidelines published and information about them is provided internally on in December2022. Investments deemed to be that basis to the Board. associates due to the shareholding and level of Gains and losses arising from changes in fair value inuence exerted over the portfolio company (realised and unrealised) are included in the net prot are measured at fair value using a consistent or loss for the period as a capital item in the income methodology to the rest of the trust’s portfolio as statement and are taken to the unrealised capital permitted by FRS102 and Para. 32 of the SORP. reserve or realised capital reserve as appropriate. Where no active market exists for the particular If an investment has been impaired such that there asset, the Company holds the investment at fair is no realistic expectation that there will be a full value as determined by the Investment Manager return from the investment, the loss is treated and approved by the Board. Valuations of unquoted as a diminution in value and transferred to the investments are reviewed on a quarterly basis and capital reserve realised. The Company conducts more frequently if events occur that could have a impairments reviews on a quarterly basis. In the material impact on the investment. case of equity investments, impairment reviews are In estimating fair value for an unquoted investment, triggered when unrealised losses exceed 50% of the Investment Manager will apply one or more book cost, or if the loss when realised would lead to valuation techniques according to the nature, a material reduction in the Company’s distributable facts and circumstances of the investment. The reserves. Fixed income investments are reviewed for Investment Manager will use reasonable current impairment if the issuing company’s ability to repay market data and inputs combined with market is uncertain unless there are reasonable grounds to participant assumptions. The assessment of fair believe that the loan could be recovered through the value will reect the market conditions at the sale of the company or its trading assets. measurement date irrespective of which valuation Other nancial assets and liabilities comprise technique is used. The IPEV Guidelines describe receivables, payables and cash and cash equivalents a range of valuation techniques, including but not which are measured at amortised cost. There are no limited to relevant observable market multiples, nancial liabilities other than payables. independent arms-length transactions, income, discounted cash ows and net assets. The fair value Cash at bank and in hand of convertible loan notesis estimated by aggregating For the purposes of the Balance Sheet, cash at bank the Net Present Value of the bond component and and in hand is cash held in bank accounts subject to the derivative value of the option to convert into immediate access. equity. The derivative value of the option to convert a particular loan noteis the probable weighted average Funds held with Custodian of the present value of each conversion scenario For the purposes of the Balance Sheet, funds held described in the loan noteinstrument as calculated with Custodian is cash held at CGWL (see note 15). using the Black Scholes option pricing model. Cash held with CGWL is to meet short term liquidity Investments are recognised and derecognised requirements and is available on demand with no at trade date where a purchase or sale is under a restrictions or penalties. contract whose terms require delivery within the time frame established by the market concerned. ### 77 For the purposes of the Statement of Cash Flows, Operating segments cash comprises cash at bank and in hand and funds There is considered to be one operating segment held with Custodian as dened above. being investment in equity and debt securities. Income Taxation Equity dividends are analysed to consider if they are Deferred tax is recognised in respect of all timing revenue or capital in nature on a case-by-case basis dierences that have originated but not yet reversed and are taken into account on the ex-dividend date, at the balance sheet date. Deferred tax assets are net of any associated tax credit. Fixed returns on only recognised to the extent that it is probable that non-equity shares and debt securities are recognised they will be recovered against the reversal of deferred on a time apportionment basis so as to reect the tax liabilities or other future taxable prots. eective yield, provided there is no reasonable Current tax is expected tax payable on the taxable doubt that payment will be received in due course. prot for the period using the current tax rate and All other income is recognised on an accruals basis. laws that have been enacted or substantially enacted Other income is treated as a repayment of capital or at the reporting date. The tax eect of dierent revenue depending on the facts of each particular items of income and expenditure is allocated case. between capital and revenue on the same basis as the particular item to which it relates. Expenditure Approved VCTs are exempt from tax on capital All expenditure is accounted for on an accruals basis. gains from the sale of xed asset investments. The Where a clear connection with the maintenance or Directors intend that the Company will continue enhancement of value of the investments can be to conduct its aairs to maintain its VCT status, no demonstrated, expenses are allocated to capital. deferred tax has been provided in respect of any Accordingly, of investment management fees, 75% capital gains or losses arising from the revaluation or are allocated to the capital reserve realised and disposal of investments. 25% to the revenue account in line with the Board’s expected long-term split of investment returns in Dividends the form of capital gains to the capital column of Only dividends recognised during the year are the income statement. Due diligence costs incurred deducted from revenue, capital or special reserves. for prospective private company purchases and Equity dividends are recognised in the accounts when transaction costs in relation to the purchase and they become legally payable. sale of investments are charged to capital. Prior to Interim dividends are approved by the Board of 1October 2023, transaction costs were included Directors and may be varied or rescinded at any within the cost and/or deducted from disposal time before payment, therefore the liability is only proceeds of investment. established when the dividend is actually paid. Final All other expenditure is charged to the revenue dividends are subject to approval at the AGM. Where account. a dividend is stated to be payable on a future date, the liability is established on that date. Capital reserves Realised prots and losses on the disposal of Functional currency investments, due diligence costs, income that is The Company is required to nominate a functional capital in nature, losses realised on investments currency, being the currency in which the Company considered to be diminished in value and 75% of predominantly operates. The Board has determined investment management fees are accounted for in that sterling is the Company’s functional currency. the capital reserve realised. Sterling is also the currency in which these accounts Increases and decreases in the valuation of are presented. investments held at the year end are accounted for in the capital reserve unrealised. Capital structure Share Capital Ordinary shares are classed as equity. The ordinary shares in issue have a nominal value of one penny and carry one vote each. Substantial holdings in the ### 78 Company are disclosed in the Directors’ Report on Capital Reserve Realised page 41. Gains/losses on disposal of investments, due diligence and transaction costs, income that is capital Share Premium in nature, diminishment of nancial assets and 75% This reserve represents the dierence between the of the investment management fee are accounted for issue price of shares and the nominal value of shares in the capital reserve realised. at the date of issue, net of related issue costs. Capital Reserve Unrealised Capital Redemption Reserve Unrealised gains and losses on investments held at This reserve is used for the cancellation of shares the year end arising from movements in fair value are bought back under the buyback facility. taken to the capital reserve unrealised. Special Reserve Revenue Reserve Distributable reserve used to pay dividends and re- Net revenue prots and losses of the Company. purchase shares under the buyback facility. 2. Income 2024 2023 £000 £000 Income from investments: Revenue: Dividend income 973 1,247 Interest from bonds 1,031 579 (1) Interest from loan notes 171 288 Bank interest 531 502 (2) Accumulation fund income 143 – Total revenue income 2,849 2,616 (1) The amount of loan stock interest recognised in the period is lower than prior year, largely because of the Kidly loan interest being fully impaired in the period. (2) Accumulation income from the IFSL Marlborough Special Situations and Marlborough UK Micro-Cap Growth funds (2023: nil). No capital income was recognised in the year (2023:nil). 3. Management fees | | 2024 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £000 | £000 | £000 | | £000 | £000 | £000 | Management fees 641 1,924 2,565 699 2,098 2,797 The IMA terminates on 12months’ notice, subject to earlier termination in certain circumstances. In the event of termination by the Company on less than the agreed notice period, compensation may be payable to the Investment Manager in lieu of the unexpired notice period. No notice had been given by the Investment Manager or by the Board to terminate the agreement as at the date of approval of these accounts. The Investment Manager receives an investment management fee of 1.7% per annum of the NAV of the Company, calculated and payable quarterly in arrears. At 30September 2024, £615,231 (2023:£645,397) was owed in respect of management fees. The Company receives a reduction to the annual management fee for investments in other funds managed by the Investment Manager, being any investment in the IFSL Marlborough Special Situations Fund and/or the IFSL Marlborough UK Micro-Cap Growth Fund so the Company is not charged twice for these services. This amounted to £75,184 for the year to 30September 2024 (2023:£49,931). The Investment Manager has agreed to indemnify the Company against annual running costs exceeding 3.5% of its net assets. No fees were waived between 1October 2023 and 30September 2024 and no fees were waived between 1October 2022 and 30September 2023 under the indemnity. ### 79 4. Other expenses 2024 2023 £000 £000 Other revenue expenses: Administration fee 250 195 Directors’ fees 216 205 Legal& professional 27 39 London Stock Exchange fees 83 84 Registrar’s fee 46 47 Website and marketing 36 60 Printing, postage and stationary 42 40 Auditors’ remuneration – for audit services 63 55 VCT monitoring fees 14 15 Company secretarial fees 73 57 Custody fee 30 30 Directors’ and ocers’ liability insurance 27 36 Broker’s fee 5 5 VAT 128 115 (1) Other expenses 76 104 (2) Provision against income receivable 368 (35) Total other revenue expenses 1,485 1,052 Other capital expenses: Due diligence costs 9 32 VAT on due diligence costs 1 7 (3) Transaction costs on investment transactions charged to capital 33 – Total other capital expenses 43 39 Total other expenses 1,528 1,091 (1) Other expenses include FCA fees, AIC membership fees, VCT Association fees, recruitment costs, professional subscriptions, license costs, Shareholder event costs and other nominal expenses. (2) Kidly loan stock interest impairment of £362,795 and XP Powerplc cancelled dividend of £5,700. (3) During the year the Company incurred transaction costs of £23,907 (2023:£97,493) and £9,439 (2023:£15,710) on purchases and sales respectively. These amounts are included in capital expenses; (2023:included in the losses on investments as disclosed in the income statement. The Directors’ remuneration above includes national insurance contributions. Directors’ remuneration excluding employer’s national insurance contributions is detailed in the directors’ remuneration report on page 45. The maximum aggregate directors’ emoluments authorised by the Articles are detailed in the Directors’ Remuneration Report on page 45. 5. Tax on ordinary activities (1) | The tax charge for the year is based on the standard rate of UK Corporation Tax of 25% (2023:22% | | ). | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | Total | | Total | | | £000 | | £000 | Loss on ordinary activities before taxation (6,585) (29,727) UK Corporation Tax:25% (2023:22%) (1,646) (6,540) Eect of non taxable losse s on investments 1,335 6,260 Eect of non taxable UK dividend income (242) (274) Eect of disallowed costs 8 – Deferred tax not recognised 545 554 Current tax charge – – (1) Average rate of corporation tax applicable for the period. At the 30September 2024 the Company had tax losses carried forward of £26,556,949 (2023:£24,379,001). It is unlikely that the Company will generate enough taxable income in the future to use these expenses to reduce future tax charges and therefore no deferred tax asset has been recognised. There is no taxation charge in relation to capital gains or losses. No asset or liability has been recognised in relation to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of its intention to maintain its status as a Venture Capital Trust. ### 80 6. Basic and diluted earnings/(loss) per share | | 2024 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £000 | £000 | £000 | | £000 | £000 | £000 | Return (£) 723 (7,308) (6,585) 865 (30,592) (29,727) Earnings/(loss) per ordinary share 0.20p (2.06)p (1.86)p 0.27p (9.59)p (9.32)p The earnings per share is based on 353,964,930 ordinary shares (2023:318,946,009), being the weighted average number of shares in issue during the year. 7. Investments | | Quoted | | | | Unquoted | | | Total | | Quoted | | | | Unquoted | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | (1) | | | | | | | | | (1) | | | | | | | investments | | | | investments | | | investments | | investments | | | | investments | | | investments | | | | | 2024 | | | | 2024 | | 2024 | | | 2023 | | | | 2023 | | 2023 | | | | £000 | | | | £000 | | £000 | | | £00 | | | | £000 | | £000 | Opening Valuation 122,567 9,553 132,120 108,630 10,558 119,188 Purchases at cost 23,082 4,500 27,582 56,199 1,500 57,699 Non-cash distribution 143 – 143 – – – Sale proceeds (19,554) (802) (20,356) (16,336) – (16,336) (2) Realised gains/(losses) (471) (3,099) (3,570) (8,245) – (8,245) (2) Unrealised losses (2,106) 335 (1,771) (17,705) (2,505) (20,210) Amortisation for discount/ premium on bonds 129 – 129 24 – 24 Re-Classication Adjustment (3,294) 3,294 – – – – Closing valuation 120,496 13,781 134,277 122,567 9,553 132,120 Cost at 30September 129,295 26,474 155,769 132,600 19,241 151,841 Unrealised gains/(losses) 16,845 (799) 16,046 14,981 (1,341) 13,640 (3) Diminution in value (25,644) (11,894) (37,538) (25,014) (8,347) (33,361) Closing valuation 120,496 13,781 134,277 122,567 9,553 132,120 (1) Includes the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund with valuations of £9.4m (2023:£8.3m) and £10.4m (2023:nil) respectively as at 30September 2024. Whilst unlisted, the two investments are UCITS funds with daily dealing and daily published pricing. (2) The net loss on investments held at fair value through prot or loss in the income statement of £5,341k (2023:loss£28,455k) is the sum of the realised and unrealised losses for the year as detailed in the table above. (3) Diminishments of £11,899,074 (2023:£14,762,893) were made in the year. Once adjusted for disposals/dissolutions (£7,373,105) (2023:£4,617,026) and diminishment reversals (£349,248) (2023:£230,000) the net movement for the year is £4,176,721 (2023:£9,915,867). Diminishments carried forward are £37,538,163 (2023: £33,361,442). Transaction Costs During the year the Company incurred transaction costs of £23,907 (2023:£97,493) and £9,439 (2023:£15,710) on purchases and sales respectively. These amounts are included in capital expenses; (2023:included in the losses on investments as disclosed in the income statement). Fair Value Measurement Hierarchy The table below sets out fair value measurements using FRS102 (appendix to section 2 fair value measurement) fair value hierarchy. The Company has one class of assets, being at fair value through prot or loss. ● Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2:Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.as prices) or indirectly (i.e.derived from prices). | ● Level 3:Valued by reference to valuation techniques using inputs that are not based on observable market data. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | 2023 | | | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | Investments 91,496 29,000 13,781 134,277 82,565 40,002 9,553 132,120 Transfers between level 3 and level 1 occur when a previously unquoted investment undertakes an initial public oering, resulting in its equity becoming quoted on an active market. There have been no instances in the current period (2023:none). Transfers between level 1 and/or 2 and 3 would occur when a quoted investment’s market becomes inactive, or the portfolio company elects to delist. There has been one transfer from level 1 to level 3 in ### 81 the current year for £1.1m in relation to C4X DiscoveryHoldings Ltd (2023:none) and one transfer from level 2 to level 3 for £0.8m in relation to BiVictriX Therapeutics Ltd (2023:none). Transfer values at 30 September 2024. There were transfers of £53.6k between level 1 and level 2 in the current period where the investments market is not suciently active (2023:£20.2m). There were transfers between level 2 and level 1 of £3.8m (2023:none). Transfer values at 30 September 2024. Level 3 nancial assets | 2024 | | 2024 | | 2024 | | 2023 | | 2023 | | 2023 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Equity | Preference | | | Loan | 2024 | Equity | Preference | | | Loan | 2023 | | shares | | shares | | notes | Total | shares | | shares | | notes | Total | | | | | (1) | | | | | | (1) | | | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | £’000 | £’000 | Opening balance 2,984 3,069 3,500 9,553 4,740 3,861 1,957 10,558 (2) Transfer from Level1 and 2 3,294 – – 3,294 – – – – Purchases at cost – 2,500 2,000 4,500 – – 1,500 1,500 Sale proceeds (2) – (800) (802) – – – – (3) Realised (losses) (2,199) (600) (300) (3,099) – – – – Unrealised (losses)/gains 319 638 (622) 335 (1,756) (792) 43 (2,505) Closing valuation 4,396 5,607 3,778 13,781 2,984 3,069 3,500 9,553 (1) The preference shares held are in the nature of equity. (2) BiVictriX Therapeutics Ltd and C4X Discovery HoldingsLtd delisted on 11September 2024 and 26April 2024 respectively. Bidstack Groupplc was placed into administration and delisted on 23April 2024. The transfer value of the delisted investments included in the table is the brought forward value as at 30 September 2023. (3) Honest Brew Limited was dissolved on 19September 2024. The following table sets out the basis of valuation for the material Level 3 investments and those where the value has materially changed during the year, held within the portfolio at 30September 2024. In assessing fair value, the Investment Manager considered a range of valuation methodologies including EV/ Sales, and EV/EBITDA multiples for the current and next nancial year. Where appropriate, the Investment Manager also assessed value using discounted cash ow analysis. Where observable market multiples were available, these were used as part of peer group analysis. Market based multiples were taken as reference points with discounts applied (where appropriate) to reect liquidity and forecast risk. The manager also undertook sensitivity analysis to consider the impact of a 30% movement in the peer group multiples, both higher and lower. The use of alternative investment structures such as convertible loan stock by the Company or other investors can lead to asymmetric movements in value in response to dierent upside and downside scenarios. For further information on sensitivities, please see note15. Level 3 Unquoted Investments Innity RelianceLtd (My 1st Years) Trading continues to be positive with the company reporting revenue growth despite the weaker consumer environment. EBITDA growth in 2024 will be limited by investments designed to increase the addressable market in the medium term. The fair value of the investment increased as the valuation rolled forward into the nancial year ending December2024. The valuation was reviewed against EV/Sales multiples across a peer group of listed companies which was broadly static. BiVictriX Therapeutics Ltd On 12August 2024, BiVictriX announced the proposed cancellation of admission of its ordinary shares to trading on AIM and re-registration as a private limited company after the directors concluded that the company’s market capitalisation did not fully reect the positive achievements nor the underlying prospects of the business and was a potential barrier to future growth and funding, as well as potential partnership and licensing opportunities. The directors believe that, as a private company, BiVictriX would be able to access a greater pool of investors who are more likely to support clinical development. The company has engaged a US healthcare investment bank with signicant experience in the antibody drug-conjugate (“ADC”) space to assist the company in securing additional capital. The cancellation took eect from 11September 2024. Given the short period since the delisting the investment is held at the closing bid price on the last day of trading on AIM. Bidstack Group plc Following a protracted period of underperformance, failed fundraising eorts, and a strategic review which also failed to solicit a buyer for the company’s assets, Bidstack entered administration on 22March 2024. Following this, shares in the company were cancelled from trading on AIM on 23April 2024. ### 82 | Level 3 Unquoted Investments | | | --- | --- | | C4X Discovery Holdings Ltd | On 27 March 2024, C4X Discovery announced the proposed cancellation of admission of its ordinary shares to trading on AIM and re-registration as a private limited company. Having reviewed the company's opportunities for value creation and optimal capital structure, the directors determined that, as a private company, C4X would have access to a larger quantum of funding than has historically been available through its AIM listing and that would allow it to pursue a greater number of opportunities to key value in flexion points. The cancellation took effect from 26 April 2024. The valuation of the investment is taken from the closing bid price on the last day of trading on AIM; however, it was also tested against a composite valuation that included the closing bid price prior to delisting and a risked net present value analysis of the company's balance sheet cash and partnered drug development assets. | | Kidly Ltd | A difficult trading environment through Christmas 2023 and early 2024 was compounded by balance sheet constraints. Although revenue performance was below budget, operational efficiencies resulted in significantly lower losses. Trading has improved as the year progressed. Reflecting the need for additional funding, the fair value of the equity was reduced to nil and the value of the debt heavily impaired. Subsequently, Kidly secured new funding as part of a financial restructuring that included a partial conversion of the loan note/instrument into new preferred shares. The reduction in risk allowed a partial recovery in the fair value of the convertible loan note instrument. The value of the conversion options and equity remain nil. The outstanding principal of the convertible loan note instrument is valued according to an assessment of recovery. There is no value attributed to the conversion option, which is valued using the Black Scholes option pricing model. | | Qureight Ltd | The investment into Qureight Ltd completed on 19 March 2024. The valuation was set with reference to FY25 EV/Sales multiples and assessed against listed peers. | | SCA Investments Ltd (Gousto) | The company closed 2023 strongly with EBITDA ahead of budget. EBITDA and cash flow generation improved significantly over the course of the year. Margin growth is expected to support further increases in EBITDA and cash flow in 2024. The fair value of the investment was reduced slightly within the period we moved away from EV/Sales to EV/EBITDA as the primary valuation metric and several members of the peer group reported difficult trading, leading to a reduction in peer group multiples. | | Zappar Ltd | Trading conditions remained challenging over the period as the arrival of new headset technologies sparked increased interest in immersive experiences at the expense of augmented reality. Weakness in the US digital marketing sector provided an additional headwind and revenues and profits were below budget. The valuation of the investment was reviewed against listed peers using EV/Sales multiple, and was reduced to reflect the weaker outlook. The investment was valued on a composite basis that took into account both the assessment of value on an ongoing basis as an independent company (based upon peer group EV/Sales multiples) and the potential sale of the company to Infinite Reality. Despite the potential acquisition of the company the fair value assessment was reduced slightly to reflect the more difficult trading environment. | | Rosslyn Data Technologies plc – convertible loan note | Rosslyn Data Technologies experienced challenging trading conditions in FY24 predominantly due to extended sales cycles for sizable new clients. However, on 21 August 2024 the company announced a material contract win with a leading global technology company. Post period end, Rosslyn Data Technologies secured additional equity and convertible loan note/funding. As part of this fundraise, the Company committed to converting the current 2023 convertible loan note/linto equity and investing into a new 2024 convertible loan note. There was a non-material change to the fair value of the convertible loan notes with the value of the conversion option calculated using the Black-Scholes option pricing model. | | Strip Tinning plc – convertible loan note | On 17 January 2024, Strip Tinning completed a £5.1m fundraising through the issue of new shares and convertible loan notes/to fund its EV growth strategy. As part of the funding round, the Company invested £2.0m through the new convertible loan notes. Whilst there have been short-term trading challenges in the automotive sector, the company has announced two record contract wins to supply Smart Glass Connectors for new EV platforms and a £43m strategic nomination for the supply of a cell contacting system for the battery pack of an autonomous vehicle being developed by one of the world's largest corporations, based in the USA. The fair value of the convertible loan notes/have increased modestly since the investment with the value of the conversion option calculated using the Black-Scholes option pricing model. | 83 ## 8. Significant interests At the year end the Company held 3% or more of the issued share capital of the following investments: ### Investment | | Holding % | Investment | Holding % | | --- | --- | --- | --- | | Rosslyn Data Technologies plc | 20.27% | Tortilla Mexican Grill plc | 6.47% | | Engage XR Holdings plc | 16.45% | Crimson Tide plc | 6.39% | | Abingdon Health plc | 14.76% | Oberon Investments plc | 6.08% | | PCI-PAL plc | 10.58% | Eden Research plc | 5.44% | | Equipmake Holdings plc | 9.13% | Skillcast Group plc | 4.74% | | Itaconix plc | 8.80% | Intelligent Ultrasound Group plc | 4.21% | | Fidel Partners Inc | 7.89% | Zoo Digital Group plc | 3.37% | | XP Factory plc | 7.39% | Strip Tanning Holdings plc | 3.13% | | One Media iP Group plc | 7.33% | Blackbird plc | 3.07% | ## 9. Debtors | | 2024 £000 | 2023 £000 | | --- | --- | --- | | Prepayments | 29 | 40 | | Accrued income | 949 | 1,430 | | Other debtors | 69 | 5 | | | 1,047 | 1,475 | ## 10. Creditors: amounts falling due within one year | | 2024 £000 | 2023 £000 | | --- | --- | --- | | Trade Creditors | 12 | 21 | | Accruals | 915 | 885 | | | 927 | 906 | ## 11. Called up share capital | | 2024 £000 | 2023 £000 | | --- | --- | --- | | Allotted, called-up and fully paid: 364,977,848 (2023: 327,813,939) ordinary shares of 1p each. | 3,650 | 3,278 | During the year 10,657,350 (2023: 7,183,338) ordinary shares were purchased through the buyback facility at a cost of £4,472,418 (2023: £3,636,841). The repurchased shares represent 3.25% (2023: 2.7%) of ordinary shares in issue on 1 October 2023. The acquired shares have been cancelled. During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in an offer for subscription, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the terms of the offer was reduced by £264,162, being the discount awarded to investors in the form of additional shares. A further reduction of £470 introductory commission was made resulting in fees payable to CGWL of £446,622 which were used to pay other costs associated with the prospectus and marketing. In accordance with the offer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £346,622. On 15 February 2024, 1,100,783 ordinary shares were allotted at a price of 44.58pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 26 January 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to the final dividend for the year ended 30 September 2023. On 26 July 2024, 2,235,192 ordinary shares were allotted at a price of 42.49pence per share, which was calculated in accordance with the terms and conditions of the DRIS, on the basis of the last reported NAV per share as at 5 July 2024, to Shareholders who elected to receive shares under the DRIS as an alternative to the interim dividend for the year ended 30 September 2024. Further details of the Company's capital structure can be seen in note 1. 84 ### Income entitlement The revenue earnings of the Company are available for distribution to holders of ordinary shares by way of interim, final and special dividends (if any) as may from time to time be declared by the Directors. ### Capital entitlement The capital reserve realised and special reserve of the Company are available for distribution to holders of ordinary shares by way of interim, final and special dividends (if any) as may from time to time be declared by the Directors. ### Voting entitlement Each ordinary Shareholder is entitled to one vote on a show of hands and on a poll to one vote for each ordinary share held. Notices of meetings and proxy forms set out the deadlines for valid exercise of voting rights and other than with regard to Directors not being permitted to vote on matters upon which they have an interest, there are no restrictions on the voting rights of ordinary Shareholders. ### Transfers There are no restrictions on transfers except dealings by Directors, persons discharging managerial responsibilities and their persons closely associated which may constitute insider dealing or is prohibited by the rules of the FCA. The Company is not aware of any agreements with or between Shareholders which restrict the transfer of ordinary shares, or which would take effect or alter or terminate in the event of a change of control of the Company. ### 12. Net asset value per ordinary share | | 30 September 2024 | 30 September 2023 | | --- | --- | --- | | Net assets (£'000) | 148,009 | 151,920 | | Shares in issue | 364,977,848 | 327,813,939 | | NAV per share (p) | 40.55 | 46.34 | There are no potentially dilutive capital instruments in issue and as such, the basic and diluted NAV per share are identical. ### 13. Contingencies, guarantees and financial commitments There were no contingencies, guarantees or financial commitments of the Company at the year end (2023:nil). ### 14. Related party transactions and conflicts of interest The remuneration of the Directors, who are key management personnel of the Company, is disclosed in the Directors' Remuneration Report on page 41 and in note 4 on page 80. ### Transactions with the Investment Manager As the Company's Investment Manager, CGAM is a related party to the Company for the purposes of the UKLListing Rules. As CGAM and CGWL are part of the same CGWL group, CGWL also falls into the definition of related party. Oliver Bedford, a non-executive director of the Company is also an employee of the Investment Manager which received fees of £29,500 for the year ended 30 September 2024 in respect of his position on the Board (2023:£28,000). Of these fees £7,375 was still owed at the year end. Oliver Bedford's non-executive directorship fees will increase to £30,500 per annum, with effect from 1 October 2024. CGWL acted as Administrator and Custodian for the year ended 30 September 2024. On 7 September 2023, the Company entered into an amended administration agreement with CGWL. Under the terms of the agreement the fees to be paid to CGWL were increased to £250,000 per annum (previously £195,000) with effect from 1 October 2023. With effect from 1 October 2024, the administration agreement between the Company and CGWL was novated to CGAM. Under the terms of the novation agreement, the administration fees paid by the Company were unchanged at £250,000 (plus VAT). Notwithstanding the novation, CGWL will continue to receive a fee of £30,000 per annum in relation to its appointment as the Custodian. Any future initial or trail commissions paid to Financial 85 Intermediaries will be paid by CGAM. For the year ended 30 September 2024, CGWL received fees for the support functions as follows: | | 30 September 2024 | 30 September 2023 | | --- | --- | --- | | Custody | 30,000 | 30,000 | | Administration | 250,000 | 195,000 | | Total | 280,000 | 225,000 | | Still owed at the year end | 69,585 | 55,765 | Under an offer agreement dated 7 September 2023, CGWL was appointed by the Company to administer an offer for subscription in the 2023/24 tax year and acted as receiving agent in relation to the offer. Under the terms of the agreement CGWL received a fee of 3.5 per cent. of the gross proceeds of the offer for providing these services. The Administrator agreed to discharge commissions payable to financial advisers in respect of accepted applications for offer shares submitted by them, including any trail commission. The Administrator also agreed to discharge and/or reimburse all costs and expenses of and incidental to the offer and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGWL, the Company's tax adviser's fees and expenses, registrar's fees, costs of printing, postage, advertising, publishing and circulating the prospectus and marketing the offer, including any introductory commission and discounts to potential investors. However, the Administrator was not responsible for the payment of listing fees associated with the admission of the ordinary shares to the premium segment of the Official List and to trading on the main market of the London Stock Exchange. During the year, the Company issued 44,485,284 ordinary shares of 1 penny (nominal value £444,853) in an offer for subscription, representing 13.57% of the opening share capital at prices ranging from 44.80p to 47.10p per share. Gross funds of £20,321,529 were received. The 3.5% premium of £711,254 payable to CGWL under the terms of the offer was reduced by £264,162, being the discount awarded to investors in the form of additional shares. A further reduction of £470 introductory commission was made resulting in fees payable to CGWL of £446,622 which were then used to pay other costs associated with the prospectus and marketing. In accordance with the offer agreement, the Company was entitled to a rebate of £100,000 from CGWL reducing the net fees payable to CGWL to £346,622. CGAM is appointed as Investment Manager to the Company and receives an investment management fee of 1.7% per annum. Investment management fees for the year are £2,565,844 (2023: £2,797,377) as detailed in note 3. Of these fees £615,231 (2023: £645,397) were still owed at the year end. As the Investment Manager to the Company and the investment adviser to the IFSL Marlborough Special Situations Fund and the IFSL Marlborough UK Micro-Cap Fund (in which the Company may and does invest), the Investment Manager makes an adjustment as necessary to its investment management fee to ensure the Company is not charged twice for their services. Upon completion of an investment, the Investment Manager is permitted under the IMA to charge private investee companies a fee equal to 1.5 per cent. of the investment amount. This fee is subject to a cap of £40,000 per investment and is payable directly from the investee company to the Investment Manager. The Investment Manager may also recover external due diligence and transaction services costs directly from private investee companies. Fees of £37,502 (2023: Nil) were charged to investee companies in the year under this agreement. Total commission of £31,925 was paid to CGWL in the year for broker services (2023: £63,318). The Investment Manager has agreed to indemnify the Company and keep indemnified the Company in respect of the amount by which the annual running costs of the Company exceed 3.5 per cent. of the net assets of the Company, such costs shall exclude any VAT payable thereon and any payments to financial intermediaries, the payment of which is the responsibility of the Company. No fees were waived by the Investment Manager in the financial year under the indemnity. The Company also held £8,845,455 in the client account held at CGWL at 30 September 2024 (2023: £8,119,302). 86 15. Financial instruments Risk management policies and procedures The investment objectives of the Company are to generate capital gains and income from its portfolio and to make distributions from capital or income to Shareholders whilst maintaining its status as a Venture Capital Trust. The Company intends to achieve its investment objectives by making Qualifying Investments in companies listed on AIM, private companies and companies listed on the AQSE Growth Market, as well as Non-Qualifying Investments as allowed by the VCT Rules. At least 80% of the Company’s funds have been invested in qualifying holdings during the year under the HMRC investment test denition. The balance of the Company’s funds were invested in liquid assets (such as non- qualifying equities, xed income securities and bank deposits). The Company is managed as a VCT in order that Shareholders may benet from the tax relief available. This strategy exposes the Company to certain risks, which are summarised below. The structure in place to manage these risks is set out in the Corporate Governance Report on pages 50 to 55 of the Annual Report. A detailed review of the investment portfolio is contained in the Chair’s Statement and Investment Manager’s Report on pages 4 to 9 and 28 to 31 respectively. Classication of nancial instruments The investments at year end comprise two types of nancial instruments. The basis of valuation is set out below: ● Equities – fair value through the prot and loss account. ● Fixed income securities – fair value through the prot and loss account Other nancial assets comprise cash at bank and in hand of £4,766,381 (2023: £11,111,865), funds held with Custodian of £8,845,455 (2023: £8,119,302), accrued income and debtors of £1,017,944 (2023:£1,434,688), which is classied as ‘loans and receivables measured at amortised cost’. Financial liabilities consist of trade creditors and accruals of £926,784 (2023:£905,897) which are classied as ‘nancial liabilities measured at amortised cost’. Market risk Market price risk arises from any uctuations in the value of investments held by the Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. In particular, other than bank deposits, no individual investment shall exceed 10per cent. of the Company’s net assets at the time of investment. However, many of the investments are in small companies traded on the AIM market which by virtue of their size carry more risk than investments in larger companies listed on the main market of the London Stock Exchange. Market risk is monitored by the Board on a quarterly basis and on an ongoing basis, through the Investment Manager. The following table summarises exposure to price risk by asset class at year end date: Change in Fair Value of Investments | | 30% market | | | 30% market | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | increase | | | decrease | | Aggregate value | | Aggregate value | | | | | | 2024 | | | 2024 | | 2024 | | 2023 | | Asset class | | | £’000 | | | £’000 | | £’000 | | £’000 | (1) AIM Qualifying Investments 13,234 -12,993 71,541 80,673 (2) Unquoted Qualifying Investments 1,450 -2,389 11,265 8,453 Quoted Non-Qualifying Investments 3,613 -3,613 11,959 17,366 Authorised unit trusts 2,125 -2,125 19,768 8,268 Quoted Non-Qualifying xed income securities 338 -338 19,087 17,360 Vaneck Gold Miners UCITS ETF 229 -229 656 – 20,989 -21,687 134,277 132,120 (1) Includes variances in the value of CLN issued by Rosslyn Data Technologiesplc and Strip Tinningplc. (2) Including variances in the value of CLNs issued by KidlyLtd. If market prices had been 30% higher or lower while all other variables remained unchanged the return attributable to ordinary Shareholders for the year ended 30September 2024 would have increased by £20,988,954 (2023:£22,164,436) or decreased by £21,686,392 (2023:£22,671,676) respectively. ### 87 The assessment of market risk is based on the Company’s equity and xed income portfolio including private company investments, as held at the year end. The assessment uses the AIM All-Share Index and the FTSE250 Index as proxies for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates, based on historical price movements and their relationship to movements in the FTSE100 index, their potential change in value in relation to change in value of the reference index. The review has also examined the potential impact of a 30% move in the market on the convertible loan note investments held by the Company, whose values will vary according to the price of the underlying security into which the loan noteinstrument has the option to convert. Currency risk The Company is not directly exposed to currency risk and does not invest in currencies other than sterling. There are indirect exposures through movements in the foreign exchange market as a consequence of investments held in companies who report in foreign currencies, the impact of such exposure would be insignicant. Interest rate risk The Company is fully funded through equity and has no debt; therefore, interest rate risk is not considered a material risk. The Company’s nancial assets and liabilities are denominated in sterling as follows: 30September 2024 | Fixed | Variable | | Non-Interest | | | | | --- | --- | --- | --- | --- | --- | --- | | Rate | | Rate | | Bearing | | Total | | £000 | | £000 | | | £000 | £000 | Investments 22,866 – 111,411 134,277 Cash at bank and in hand – 4,766 – 4,766 Funds held with Custodian – 8,846 – 8,846 (1) Other current assets (net) 823 – 224 1,047 Other current liabilities (net) – – (927) (927) Net assets 23,689 13,612 110,708 148,009 30September 2023 | Fixed | Variable | | Non-Interest | | | | | --- | --- | --- | --- | --- | --- | --- | | Rate | | Rate | | Bearing | | Total | | £000 | | £000 | | | £000 | £000 | Investments 20,860 – 111,260 132,120 Cash at bank and in hand – 11,112 – 11,112 Funds held with Custodian – 8,119 – 8,119 (2) Other current assets (net) 1,293 – 182 1,475 Other current liabilities (net) – – (906) (906) Net assets 22,153 19,231 110,536 151,920 (1) Includes prepayments of £29k which is not considered a nancial asset. (2) Includes prepayments of £40k which is not considered a nancial asset. Interest rate risk exposure relates to cash and cash equivalents (bank deposits) where interest income is primarily linked to bank base rates. Interest rate risk exposure on debt instruments is reected in the market risk and since these securities are valued at fair value, no additional disclosure is made in this respect. Movements in interest rates on cash and cash equivalents are not considered a material risk. Liquidity risk Liquidity risk is the risk that the Company is unable to meet obligations as they fall due. The Company has no debt and maintains sucient investments in cash or cash equivalents, or readily realisable securities to pay trade creditors and accrued expenses (£926,784 as at 30September 2024). Liquidity risk is not considered material. As at 30September 2024 the Company held £13,611,835 in cash or cash equivalents. Credit risk Credit risk relates to the risk of default by a counterparty. The Company may have credit risk through investments made in unsecured loan stock issued by Qualifying Companies or through Non-Qualifying Investments in xed income securities and exchange traded funds. No assets are past the due date for payment. ### 88 An investment will be impaired if the investee company is loss making and does not have sufficient funds available to transition into profit and in the opinion of the Investment Manager may fail to secure sufficient equity or debt funding to transition into profit, or if the borrower defaults or is expected to default on payment of accrued interest or repayment of the principal sum. The maximum credit risk exposure equates to the carrying value of assets at the balance sheet date: | | 2024 £000 | 2023 £000 | | --- | --- | --- | | Fixed income securities: | | | | Qualifying Investments (convertible loan notes) | 3,778 | 3,500 | | Non-qualifying investments (investment grade corporate bonds) | 19,088 | 17,361 | | Non-qualifying investments (UK gilt exchange traded fund) | – | 1,978 | | Total fixed income securities | 22,866 | 22,839 ^{(1)} | | Cash at bank and in hand | 4,766 | 11,112 | | Funds held at Custodian | 8,846 | 8,119 | | Other assets | 1,047 | 1,475 | | | 37,525 | 43,545 | (1) Includes UK gilt exchange traded fund as underlying investments are fixed income securities. Cash held with Custodian comprises bank deposits held through CGWL (trading as CGWM) of £8.8 million (2023: £8.1 million). Funds are held with banks that are authorised and regulated to carry on banking or deposit-taking business. All these meet the requirements of the UK's FCA CASS rules. Through its treasury function, CGWM uses a tiered level approach to counterparty selection to reflect different maturities of cash held on deposit. Funds held on deposit through CGWL, are pooled with cash deposits from other clients of CGWL and diversified across a specified panel of banks. CGWM's treasury function reviews panel members ahead of selection and prioritises the safety of client assets with the panel selection process placing an emphasis on quality and security. Participating banks must be rated as investment grade by at least two international credit rating agencies. CGWM will also consider the expertise and market reputation of the bank; review a bank's financial statements and consider its capital and deposit base; consider the geographical location of the parent; monitor a bank's credit default swaps; and ask the bank to complete a due diligence questionnaire. The CGWM treasury function maintains regular contact with panel banks, typically meeting them every 6 months or so. There are no withdrawal restrictions on the Company's cash held with CGWL. Fair value of financial assets and financial liabilities Equity investments are held at fair value. No investments are held for trading purposes only. ### Capital management policies and procedures The current policy is to fund investments through equity. No future change to this policy is envisaged. As a public limited company, the Company is required to hold a minimum £50,000 share capital. The Company's capital is summarised in notes 11 and 11 to these accounts. The Company has no debt and is fully funded by equity. 89 16. Dividends | 2024 | 2023 | | --- | --- | | Ord | Ord | | £000 | £000 | Paid per share: Special capital dividend of 2.00pence for the year ended 30September 2023 – 6,216 Paid per share: Final capital dividend of 2.00pence for year ended 30September 2022 – 6,216 Paid per share: Interim capital dividend of 1.00 penny for year ended 30September 2023 – 3,298 Paid per share: Final capital dividend of 1.50pence for the year ended 30September 2023 5,149 – Paid per share: Interim capital dividend of 1 penny for year ended 30September 2024 3,649 – Paid per share: | Special capital dividend of 1.50pence for year ended 30September 2024 | 5,474 | | | – | | --- | --- | --- | --- | --- | | | | (2) | | (2) | | Dividends unclaimed (4) | | | | (13) | | | | (1) | | (3) | | 14,268 | | | 15,717 | | Proposed per share: Final capital dividend of 1.25pence for the year ended 30September 2024 4,591 – Proposed per share: Special capital dividend of 1.50pence for the year ended 30September 2025 5,510 – Paid per share: Final capital dividend of 1.50pence for the year ended 30September 2023 – 5,151 (1) The dierence between total dividends paid for the period ending 30September 2024 and the cash ow statement is £1,436,000 which reects the amount of dividends reinvested under the DRIS of £1,440,000 less the £4,000 due to the Company for unclaimed dividends for a period over 12years. (2) Unclaimed dividends for a period of 12years due/reverted to the Company. (3) The dierence between total dividends paid for the period ending 30September 2023 and the cash ow statement is £1,300,000 which reects the amount of dividends reinvested under the DRIS. 17. Post balance sheet events Share buybacks As at 17December2024, 3,559,262 ordinary shares have been purchased at an average price of 38.24pence per share and a total cost of £1,361,156. Oer for subscription and shares issued Under an oer agreement dated 9October 2024, CGAM was appointed by the Company to administer a new oer for subscription for the 2024/25 tax year and act as receiving agent in relation to the oer. Under the terms of the agreement CGAM will receive a fee of 3.5per cent. of the gross proceeds of the oer for providing these services. The Administrator has agreed to discharge commissions payable to nancial advisers in respect of accepted applications for Oer Shares submitted by them, including any trail commission. The Administrator has also agreed to discharge and/or reimburse all costs and expenses of and incidental to the oer and the preparation of the prospectus, including without limitation to the generality of the foregoing, FCA vetting fees in relation to the prospectus, sponsor and legal fees, expenses of the Company and CGAM, the Company’s tax adviser’s fees and expenses, registrar’s fees, costs of printing, postage, advertising, publishing and circulating the prospectus and marketing the oer, including any introductory commission and discounts to potential investors. However, the Administrator will not be responsible for the payment of listing fees associated with the admission of the Oer Shares to the premium segment of the Ocial List and to trading on the main market of the London Stock Exchange. If following the nal admission under the oer, the aggregate fee that has been paid to CGAM exceeds the costs and expenses referred to above by more than £25,000, then CGAM will rebate any surplus to the Company subject to a maximum rebate of £100,000. As at 17December2024, 5,907,854Oer Shares have been issued through the oer for subscription raising gross proceeds of £2,411,037. ### 90 New investments The Company has made the following investments since the period end: | Amount | | Investment | | --- | --- | --- | | invested | | into existing | | | £000 | company | Qualifying Investments Feedback plc 750 No Ixico plc 710 No Rosslyn Data Technologiesplc 10% unsecured loan notes2029 400 Yes Non-Qualifying Investments Disposals The Company has made the following full disposals since the period end: Proceeds £000 Qualifying Investments Gnity plc 5 Surface Transforms plc 24 Non-Qualifying Investments Bodycote plc 1,248 Corporate Actions On 25 October 2024, the Company invested a further £400,000 into a new 2029 convertible loan note instrument whilst also converting £300,000 (plus accrued interest) of the 2028 convertible loan note instrument into new ordinary shares in Rosslyn Data Technologies plc. On 11 November 2024, Aquis Exchange plc announced a recommended cash oer by SIX Exchange Group AG for 727 pence per share in cash. The acquisition remains subject to approval by a majority of shareholders. On 4 December 2024, Learning Technologies Group plc announced a recommended cash oer by General Atlantic (through Leopard UK Bidco Ltd) for 100 pence per share in cash. The acquisition remains subject to approval by a majority of shareholders. On 3 December 2024, Zappar Ltd announced that its acquisition by Innite Reality had not completed. ### 91 # Alternative performance measures ## Alternative performance measures An APM is a financial measure of the Company's historic or future financial performance, financial position or cash flows which is not defined or specified in the applicable financial reporting framework. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for a VCT. The definition of each APM is in the glossary of terms on pages 94 to 97. Where the calculation of the APM is not detailed within the financial statements, an explanation of the methodology employed is below: ### NAV total return | | | 30 September 2024 | 30 September 2023 | | --- | --- | --- | --- | | Opening NAV per share | A | 46.34p | 60.19p | | Special dividend paid | B | 1.50p | 2.00p | | Final dividend paid | C | 1.50p | 2.00p | | Interim dividend paid | D | 1.00p | 1.00p | | Closing NAV per share | E | 40.55p | 46.34p | | NAV total return | ((B+C+D+E-A)/A)*100 | -3.86% | -14.70% | ### NAV total return (dividends reinvested) | | | 30 September 2024 | % Return | | --- | --- | --- | --- | | Opening NAV per share (30 September 2023) | A | 46.34p | | | Closing NAV per share (30 September 2024) | | 40.55p | | | Final dividend for year paid February 2024 | 1.50p | | | | Interim dividend July 2024 | 1.00p | | | | Special dividend July 2024 | 1.50p | | | | Total dividend payments | | 4.00p | | | Closing NAV per share plus dividends paid | | 44.55p | -3.86% (-14.70% 30 September 2023) | | In year performance of reinvested dividends | | -0.16p | | | NAV total return (dividends reinvested) | ((B-A)/A)*100 | B 44.39p | -4.21% (-15.93% 30 September 2023) | ### Share price total return | | | 30 September 2024 | 30 September 2023 | | --- | --- | --- | --- | | Opening share price | A | 43.00p | 62.75p | | Special dividend paid | B | 1.50p | 2.00p | | Final dividend paid | C | 1.50p | 2.00p | | Interim dividend paid | D | 1.00p | 1.00p | | Closing share price | E | 39.00p | 43.00p | | Share price total returns | ((B+C+D+E-A)/A)*100 | 0.00% | -23.51% | 92 Share price total return (dividends reinvested) 30September % Return 2024 Opening share price A 43.00p (30September 2023) Closing share price 39.00p (30September 2024) Final dividend for year paid February2024 1.50p Interim dividend 1.00p July2024 Special dividend July2024 1.50p Total dividend payments 4.00p Closing share price plus dividends paid 43.00p 0.00% (-23.51% 30September 2023) In year performance of reinvested dividends -0.08p Share price total return (dividends reinvested) ((B-A)/A)*100 B 42.92p -0.18% (-24.80% 30September 2023) Ongoing charges ratio The OCR has been calculated using the AIC’s “Ongoing Charges” methodology. | 30September | | 30September | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | £000 | | £000 | Investment management fee 2,565 2,797 (1) Other expenses 1078 1,035 VCT proportion of IFSL Marlborough funds expenses 153 65 Ongoing charges A 3,796 3,897 Average net assets B 156,509 174,334 Ongoing charges ratio (A/B)*100 2.43% 2.24% (1) Other expenses exclude London Stock Exchange fees of £49,110 for admission of shares under the oer for subscription and prior year recognised loan stock interest and dividends not receivable of £368,495 expensed through the income statement as the Board do not consider these costs to be ongoing costs to the fund. As per the AIC’s “Ongoing Charges” methodology, transaction costs are also excluded. Share price discount 30September 30September 2024 2023 Share price A 39.00p 43.00p Net asset value per share B 40.55p 46.34p Discount ((A/B)-1)*100 -3.82% -7.21% The 1-year average discount of -5.46% is calculated by taking the average of the share price discount at each month end between 1October 2023 and 30September 2024. The 5-year average discount of -5.79% is calculated by taking the average of the share price discount at each month end between 1October 2019 and 30September 2024. ### 93 ## Glossary of terms Administrator Canaccord Genuity Wealth Limited (“CGWL”) until 30September 2024 and CGAM from 1October 2024. AGM The Company’s Annual General Meeting to be held at 12:30pm on 6February 2025 at 88 Wood Street, London,EC2V7QR. AIC The Association of Investment Companies. AIC Code The AIC Code of Corporate Governance. AIFM Alternative Investment Fund Manager. AIM The Alternative Investment Market operated by the London Stock Exchange. Annual Report This annual report of the Company for the nancial year 1 October 2023 to 30 September 2024. Articles The articles of association of the Company from time to time. AQSE Growth Market The Growth Market of the Aquis Stock Exchange, a recognised investment exchange for growth companies operated by Aquis Exchangeplc. Auditor The independent auditor of the Company, BDO LLP. Board The board of directors of the Company, from time to time. CGWM In the UK& Europe, Canaccord Genuity Wealth Management (“CGWM”) is a trading name of CGWL, CG Wealth Planning Limited (“CGWPL”), CGAM, Intelligent CapitalLtd (“ICL”) and Canaccord Genuity Wealth (International) Limited (“CGWIL”), which are all subsidiaries of Canaccord Genuity GroupInc. In Scotland, Adam& Company is a trading name of Canaccord Genuity Wealth Limited (“CGWL”), CG Wealth Planning Limited (“CGWPL”) and Intelligent Capital Limited (“ICL”). Company Hargreave Hale AIM VCTplc. Company Secretary JTC (UK) Limited. Custodian Canaccord Genuity Wealth Limited (“CGWL”). Director A director of the Company. DRIS The dividend reinvestment scheme operated by the Company. Earnings per share total return Total prot/(loss) for the reporting period divided by the weighted average number of shares in issue. ### 94 Eligible Shares Shares in Qualifying Companies which do not carry preferential rights to dividends and/or assets on a winding-up or redemption. FCA The Financial Conduct Authority. FTSE AIM All-Share Index Total Return Measures the total return of the underlying FTSE AIM All-Share index combining both capital performance and income. Calculated on a dividends re-invested basis. FTSE All-Share Index Total Return Measures the total return of the underlying FTSE All-Share index combining both capital performance and income. Calculated on a dividends re-invested basis. IMA Investment management agreement between the Company and CGAM dated 7September 2023. Investment Manager Canaccord Genuity Asset Management Limited (“CGAM”). IPEV Guidelines International Private Equity and Venture Capital Valuation guidelines. IPO The process by which a company obtains a rst listing or quotation for securities on an investment exchange and oers securities to the public for the rst time. ISAs (UK) International Standards on Auditing (UK). ITA Income Tax Act2007, as amended. KID The Company’s Key Information Document. Knowledge Intensive Companies A company satisfying the conditions in Section331(A) of Part6 ITA. KPIs Key performance indicators. MSPEC The Management and Service Provider Engagement Committee of the Board. Non-Qualifying Company or Non-Qualifying Investment An investment made by the Company which is not a Qualifying Investment and is permitted under the VCT Rules. Oer Shares New ordinary shares of 1 penny each in the capital of the Company issued or to be issued pursuant to the Oer for Subscription of Ordinary Shares in Hargreave Hale AIM VCTplc launched on 9October 2024. PRIIPs (Retained EU legislation) Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs). Qualifying Company or Qualifying Investment An investment made by a venture capital trust in a trading company which comprises a qualifying holding under Chapter4 of Part6 ITA. ### 95 Qualifying Trade A trade complying with the requirements of section 300 ITA. Receiving Agent Canaccord Genuity Asset Management Limited (or “CGAM”). Registrar Equiniti Limited. SaaS Software-as-a-Service. Section 172 Section 172 of the Companies Act 2006. Shareholders Holders of ordinary shares of 1pence each in the capital of the Company, from time to time. SORP Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (2022). State aid State aid received by a company as dened in Section280B (4) of ITA. UK GAAP United Kingdom Generally Accepted Accounting Practice and applicable law. VCT or Venture Capital Trust Venture capital trust as dened in section 259 ITA. VC TA The VCT Association. VCT Rules All legislation, rules and regulations that apply to VCTs from time to time, including the ITA. Alternative performance measures (or “APMs”) An alternative performance measure is a nancial measure of the Company’s historic or future nancial performance, nancial position or cash ows which is not dened or specied in the applicable nancial reporting framework. The Company uses the following alternative performance measures: Net asset value (“NAV”) The value of the Company’s assets, less its liabilities. NAV per share The net asset value divided by the total number of shares in issue at the year end. NAV total return The NAV total return shows how the NAV per share has performed over a period of time in percentage terms taking into account both capital returns and dividends paid. We calculate this by adding the dividends paid in the period to the closing NAV per share and measuring the percentage change relative to the opening NAV per share. NAV total return since inception The sum of the published NAV per share plus all dividends paid per share over the lifetime of the Company. NAV total return (dividends reinvested) The NAV total return (dividends reinvested) shows the percentage movement in the NAV Total Return per share ### 96 over time taking into account both capital returns and dividends paid assuming dividends are re-invested into new shares. To be consistent with industry standard practice, the allotment price of the new shares issued in place of the cash dividend is assumed to be the prevailing ex-dividend NAV per share on the day the shares go ex-dividend. This diers from the methodology followed by the registrar when issuing shares under the Company’s dividend re-investments scheme. Ongoing charges ratio (or “OCR”) The ongoing costs of managing and operating the Company divided by its average net assets. Calculated in accordance with AIC guidance, this gure excludes ‘non-recurring costs’. Share price discount As stock markets and share prices vary, a VCT’s share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. Share price total return The share price total return shows performance over a period of time in percentage terms by reference to the mid-price of the Company’s shares taking into account dividends paid and payable having past the ex-dividend date in the period and any return of capital if applicable. We calculate this by adding the dividends paid and payable having past the ex-dividend date in the period to the closing mid-price and measuring the percentage change relative to the opening mid-price. Share price total return (dividends reinvested) The performance of the Company’s share price on a total return basis assuming dividends are reinvested in new shares at the mid-price of the shares on the ex-dividend date. ### 97 ## Shareholder information The Company’s ordinary shares (Code:HHV) are listed on the London Stock Exchange. Shareholders can visit the London Stock Exchange website, www.londonstockexchange.com, for the latest news and share prices of the Company. Further information for the Company can be found on its website at www.hargreaveaimvcts.co.uk. Net asset value per share The Company’s NAV per share as at 6December2024 was 40.29pence per share. The Company publishes its unaudited NAV per share on a weekly basis. Dividends Subject to approval at the forthcoming AGM on 6February 2025, the Board has proposed the payment of a nal dividend of 1.25pence in respect of the nancial year ending 30September 2024. A special dividend of 1.50pence per share has also been approved by the Board. Shareholders who wish to have future dividends paid directly into their bank account rather than sent by cheque to their registered address can complete a mandate for this purpose. Mandates can be obtained by contacting the Registrar. Alternatively, bank details can be updated through the Registrar’s Shareview system. Dividend reinvestment scheme The Company oers a DRIS scheme allowing Shareholders to elect to receive all of their dividends from the Company in the form of new ordinary shares. Shareholders may elect to join the DRIS at any time by completing a DRIS mandate form. Mandates can be obtained by contacting the Registrar or by visiting the Company’s website at www.hargreaveaimvcts.co.uk. As new ordinary shares will be issued, Shareholders are also able to claim tax relief on the shares, including 30per cent. income tax relief on their investment (subject to the terms of the VCT Rulesand the personal circumstances of the Shareholder). To exit the DRIS, a revoke form must be completed and returned to the Registrar. Revoke forms can be obtained by contacting the Registrar or by visiting the Company’s website at www.hargreaveaimvcts.co.uk. Please notethat completing a bank mandate form or adding bank details to your account through Shareview in isolation will not remove you from the DRIS scheme. Selling your shares The Company aims to improve the liquidity in its ordinary shares and to maintain a discount of approximately 5% to the last published NAV per share (as measured against the mid-price of the shares) by making secondary market purchases. This policy is non-binding and at the discretion of the Board. The eective operation of the policy is dependent on a range of factors which may prevent the Company from achieving its objectives. As a result there is no guarantee you will be able to sell your shares or of the discount to NAV per share at which they will be sold. VCT share disposals are exempt of capital gains tax when the disposal is made at arms’ length, which means a Shareholder should sell their shares to a market maker through a stockbroker or another share dealing service. In practice, this means that the price achieved in a sale is likely to be below the mid-price of the Company’s shares and, therefore, the discount is likely to be more than 5% to the last published NAV per share. VCT share disposals settle two business days post trade if the shares are already dematerialised or placed into CREST ahead of the trade, or ten days post trade if the stock is held in certicated form. Investors who sell their VCT shares before the fth anniversary of the share issue are likely to have to repay their income tax relief. CGWM can facilitate the sale of the Company’s shares and is able to act for Shareholders who wish to sell their shares. However, you are free to nominate any stockbroker or share dealing service to act for you. If you would like further information from CGAM please contact the VCT administration team at aimvct@ canaccord.com or call 01253 376622. Please notethat CGAM will need to be in possession of the share certicate and a completed CREST transfer form before executing the sale. If you have lost your share certicate, then you can request a replacement certicate from the Registrar. The Registrar will send out an indemnity form, which you will need to sign. The indemnity form will also need to be countersigned by a UK insurance company or bank that is a member of the Association of British Insurers. Since indemnication is a form of insurance, the indemnifying body will ask for a payment to reect their risk. Fees will reect the value of the potential liability. Shareholder enquiries: For general Shareholder enquiries, please contact the administration team at CGAM on 01253 376622 or by ### 98 e-mail to aimvct@canaccord.com. For enquiries concerning the performance of the Company, please contact the Investment Manager on02075234837 or by e-mail to aimvct@canaccord.com. Electronic copies of this report and other published information can be found on the Company’s website at www. hargreaveaimvcts.co.uk. Change of address To notify the Company of a change of address please contact the Registrar at the address on page100. Alternatively, address details can be updated through the Registrar’s Shareview system. ### 99 ## Company information | Directors | Investment Manager and Administrator | | --- | --- | | David Brock, Chair | Canaccord Genuity Asset Management Limited | | Oliver Bedford | 88 Wood Street | | Angela Henderson | London | | Megan McCracken | EC2V 7QR | Busola Sodeinde Justin Ward | Custodian | Company Secretary | | --- | --- | | Canaccord Genuity Wealth Limited | JTC (UK) Limited | | c/o Talisman House | The Scalpel | | Boardmans Way | 18th Floor | | Blackpool | 52 Lime Street | | FY4 5FY | London | EC3M 7AF | VCT Status Adviser | Registrars | | --- | --- | | Philip Hare& AssociatesLLP | Equiniti Limited | | 6 Snow Hill | Aspect House | | London | Spencer Road | | EC1A 2AY | Lancing | West Sussex BN99 6DA | Auditors | Brokers | | --- | --- | | BDOLLP | Singer Capital Markets Securities Limited | | 55 Baker Street | One Bartholomew Lane | | London | London | | W1U 7EU | EC2N 2AX | | Company Registration Number | Solicitors | | 05206425 in England and Wales | Howard KennedyLLP | 1 London Bridge Registered oce London Talisman House SE1 9BG Boardmans Way Blackpool FY4 5FY ### 100 # Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of Hargreave Hale AIM VCTP plc (the "Company") (the "AGM") will be held at 88 Wood Street, London EC2V7QR on Thursday 26 February 2025 at 12.30pm for the purposes of considering and if thought fit, passing the following resolutions, of which resolutions 1 to 12 (inclusive) will be proposed as ordinary resolutions and resolutions 13 and 14 as special resolutions: Ordinary Resolutions 1. To receive and adopt the reports of the directors and auditor and the audited financial statements for the year ended 30 September 2024. 2. To receive and approve the directors' remuneration report for the year ended 30 September 2024. 3. To approve the directors' remuneration policy, the full text of which is contained in the directors' remuneration report for the year ended 30 September 2024. 4. To reappoint BDO LLP as auditors to the Company and to authorise the directors of the Company to determine their remuneration. 5. To re-elect David Brock as a director of the Company. 6. To re-elect Oliver Bedford as a director of the Company. 7. To re-elect Justin Ward as a director of the Company. 8. To re-elect Megan McCracken as a director of the Company. 9. To re-elect Busola Sodeinde as a director of the Company. 10. To approve a final dividend of 1.25pence per ordinary share in respect of the year ended 30 September 2024. 11. To authorise the directors of the Company (the "Directors"), in addition to any existing power and authority granted to the Company pursuant to Article 29 of the Company's articles of association (the "Articles"), to exercise the power conferred on them by Article 29 of the Articles to offer holders of ordinary shares in the capital of the Company the right to elect to receive ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") credited as fully paid, instead of cash, in respect of the whole (or some part to be determined by the Directors) of dividends declared, made or paid during the period starting with the date of this resolution and ending at the conclusion of the next annual general meeting of the Company following the date of this resolution and to authorise the Directors to do all acts and things required or permitted to be done in accordance with the Articles in connection therewith. 12. THAT, in addition to all existing authorities, the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot Ordinary Shares and to grant rights to subscribe for, or to convert any security into, Ordinary Shares ("Rights"), up to an aggregate nominal value of £367,326 (being equal to approximately 10 per cent. of the Company's issued share capital (excluding treasury shares) as at 17 December 2024 generally from time to time or pursuant to Shareholders' right to elect to participate in the dividend reinvestment scheme operated by the Company in accordance with Article 29 of the Articles on such terms as the Directors may determine, such authority to expire on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2026 and the expiry of 15 months from the passing of this resolution (unless previously renewed, varied or revoked by the Company in a general meeting), but so that this authority shall allow the Company to make, before the expiry of this authority offers or agreements which would or might require Shares to be allotted or Rights to be granted after such expiry and the Directors shall be entitled to allot Shares or grant Rights pursuant to any such offers or agreements as if the power conferred by this resolution had not expired. Special Resolutions 13. THAT, in addition to all existing authorities and subject to the passing of Resolution 12 set out in this notice of meeting, the Directors be and are hereby empowered, pursuant to sections 570 and 573 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority given pursuant to Resolution 12 set out in the notice of this meeting, or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power: (i) shall be limited to the allotment of equity securities and the sale of treasury shares for cash up to an aggregate nominal amount of £183,663 (representing approximately 5 per cent. of the issued share capital of the Company (excluding treasury shares) as at 17 December 2024) pursuant to the dividend reinvestment scheme operated by the Company; 101 (ii) shall be limited to the allotment of equity securities and the sale of treasury shares for cash (otherwise than pursuant to sub-paragraph (i) above), up to an aggregate nominal amount of £183,663 (representing approximately 50 per cent. of the issued share capital of the Company (excluding treasury shares) as at 17 December 2024); and (iii) expires on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2026 and the expiry of 15 months from the passing of this resolution (unless previously renewed, varied or revoked by the Company in a general meeting), save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if the power conferred by this resolution had not expired. 14. THAT, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the date hereof, the Company be generally and unconditionally authorised, in accordance with section 701 of the Act, to make one or more market purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares on such terms and in such manner as the directors may determine (either for cancellation or for retention as treasury shares for future re-issue, resale, transfer or cancellation) provided that: a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 55,062,233 Ordinary Shares or, if less, the number representing approximately 14,99 per cent. of the issued share capital of the Company as at the date of the passing of this resolution; b) the maximum price (excluding expenses) which may be paid for any Ordinary Share purchased pursuant to this authority shall not be more than the higher of: (i) 105 per cent. of the average of the middle market quotations of an Ordinary Share in the Company, as derived from the London Stock Exchange Daily Official List, for the five business days immediately preceding the date of purchase; and (ii) the higher price of the last independent trade of an Ordinary Share and the highest current independent bid for such a share on the London Stock Exchange plc; c) the minimum price (excluding expenses) which may be paid for an Ordinary Share shall be 1 penny (the nominal value thereof); and d) unless previously varied, revoked or renewed by the Company in general meeting, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2026 or on the expiry of 15 months following the passing of this resolution, whichever is the earlier, save that the Company may, prior to the expiry of such authority, enter into a contract or contracts to purchase ordinary shares under such authority which will or might be completed or executed wholly or partly after the expiration of such authority and may make a purchase of Ordinary Shares pursuant to any such contract or contracts as if the power conferred by this resolution had not expired. By order of the Board of Directors. JTC (UK) Limited Company Secretary Registered Office: The Scalpel 18th Floor 52 Lime Street London EC3M 7AF 17 December 2024 A member entitled to attend and vote at this meeting may appoint a proxy or proxies to attend and vote on their behalf. A proxy need not also be a member of the Company, however Shareholders who wish to appoint a proxy are recommended to appoint the Chair of the AGM as their proxy. To be effective, forms of proxy together with the power of attorney or other authority, if any, under which it is signed, or a notorially certified copy or a copy 102 certied in accordance with the Powers of Attorney Act1971 of that power or authority must be lodged with the Company’s Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West SussexBN996DA (the “Registrar”) not less than 48hours (excluding non-working days) before the time appointed for holding the meeting or any adjourned meeting. A member may appoint more than one proxy, provided each proxy is appointed to exercise rights attached to dierent shares. Members may not appoint more than one proxy to exercise rights attached to any one ordinary share. The return of a completed proxy form or other instrument of proxy will not prevent you attending the AGM and voting in person if you wish. The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been nominated to receive communications from the Company in accordance with Section146 of the Companies Act2006 (nominated persons). Nominated persons may have a right under an agreement with the member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of voting rights. The Company, pursuant to Regulation 41 of the Uncertied Securities Regulations 2001 species that only those members registered in the register of members of the Company as at 6.30pm on 4February 2025 or, in the event that the meeting is adjourned, on the register of members at 6.30pm on the day two days (excluding non-working days) prior to the reconvened meeting, shall be entitled to attend or vote at the aforesaid annual general meeting in respect of the number of shares registered in their name at that time. Changes to entries on the relevant register of members after 6.30pm on 4February 2025 (or in the event that the meeting is adjourned, as at 6.30pm two days (excluding non-working days) prior to the adjourned meeting) shall be disregarded in determining the rights of any person to attend or vote at the meeting notwithstanding any provisions in any enactment, the Articles of Association of the Company or any other instrument to the contrary. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual (www.euroclear.com). CREST personal members or other CREST sponsored members who have appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST proxy instruction”) must be properly authenticated in accordance with Euroclear’s specications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the Registrar (ID RA19), not later than 48hours (excluding non-working days) before the time appointed for the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and where applicable their CREST sponsors or voting service provider(s) should notethat Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is the responsibility of the CREST member concerned to take (or if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that their CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation 35(5)(a) of the Uncerticated Securities Regulations 2001. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12.30pm on 4February 2025 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. ### 103 It is possible for you to submit your proxy votes online by going to the Registrar's Shareview website, www.shareview.co.uk, and logging in to your Shareview Portfolio. Once you have logged in, simply click 'View' on the 'My Investments' page and then click on the link to vote and follow the on-screen instructions. If you have not yet registered for a Shareview Portfolio, go to www.shareview.co.uk and enter the requested information. It is important that you register for a Shareview Portfolio with enough time to complete the registration and authentication processes. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, the proxy will vote or abstain from voting at his or her discretion. The proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting. Information regarding the AGM, including the information required by section 311A of the Companies Act 2006, is available from https://www.hargreaveaimvcts.co.uk. Under section 319A of the Companies Act 2006, the Company must answer at the AGM any question a member asks relating to the business being dealt with at the AGM unless: - answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; - the answer has already been given on a website in the form of an answer to a question; or - it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. In accordance with Section 311A of the Companies Act 2006, the contents of this notice of meeting, details of the total number of shares in respect of which members are entitled to exercise voting rights at the AGM and if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this notice will be available on the Company's website https://www.hargreaveaimvcts.co.uk. Members satisfying the thresholds in Section 527 of the Companies Act 2006 can require the Company to publish a statement on its website setting out any matter relating to the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the AGM that the members propose to raise at the meeting. The Company cannot require the members requesting the publication to pay its expenses. Any statement required to be placed on the website must also be sent to the Company's auditor no later than the time it makes its statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required to publish on its website. Members representing 5 per cent. or more of the total voting rights of all members or at least 100 persons (being either members who have a right to vote at the AGM and hold shares on which there has been paid up an average sum, per member, of £100, or persons satisfying the requirements set out in s.153(2) of the Companies Act 2006) may: a) require the Company, under s.338 of the Companies Act 2006, to give notice of a resolution which may properly be moved at the AGM. Any such request, which must comply with s.338(4) of the Companies Act 2006, must be received by the Company no later than 6 weeks before the date fixed for the AGM; and b) require the Company, under s.338A of the Companies Act 2006 to include any matter (other than a proposed resolution) in the business to be dealt with at the AGM. Any such request, which must comply with s.338A of the Companies Act 2006, must be received by the Company no later than 6 weeks before the date fixed for the AGM. Any person holding 3 per cent. or more of the total voting rights of the Company who appoints a person other than the Chair of the meeting as his/her proxy will need to ensure that both he/she and his/her proxy complies with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. Shareholders (and any proxy or representatives they appoint) agree, by attending the meeting, that they are expressly requesting that they are willing to receive any communications (including communications relating to the Company's securities) made at the meeting. 104 Members who have general queries about the meeting should contact the Registrar on +44(0)3713842714, ifcalling from outside the UK, please ensure the country code is used, or contact them via their website www.shareview.co.uk. Lines are open 8.30am to 5.30pm Monday to Friday (excluding public holidays in England and Wales), (no other methods of communication will be accepted). You may not use any electronic address provided either in this notice of meeting or any related documents (including the form of proxy) to communicate with the Company for any purpose other than those expressly stated. Note: 1. The following documents will be available for inspection at the registered oce of the Company, Talisman House, Boardmans Way, Blackpool, England,FY45FY, during usual business hours on a weekday (except Saturdays, Sundays and Public Holidays) until the date of the meeting and at the place of the meeting for a period of 15 minutes up to and during the meeting; a) copies of the Directors’ letters of appointment; b) the Articles of Association of the Company; and c) the register of Directors’ interests in the shares of the Company. 2. As at 17December2024 (being the latest business day prior to the publication of this Notice), the Company’s issued share capital consists of 367,326,440Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company are 367,326,440. ### 105 # Appendix - Scrip dividend scheme ## SUMMARY TERMS AND CONDITIONS ### General The Company operates, through the Registrar, a DRIS whereby Shareholders can elect to have relevant dividends reinvested in new Ordinary Shares. The Company seeks to renew its DRIS by virtue of Resolution 211 set out in the Notice of AGM. If Resolution 211 is passed, the DRIS will apply to any subsequent interim or final dividend of the Company in respect of which a scrip dividend alternative is offered and this Shareholder authority will expire at the AGM to be held in 2026. When a future dividend is announced, the Company will advise if the DRIS applies to that dividend, together with the relevant details for that dividend. The details (including the timetable, price etc.) for each relevant dividend to which the DRIS will apply along with the full terms and conditions of the DRIS, will be/are available on the Company's website at https://www.hargreaveaimvcts.co.uk. Information regarding future scrip dividend alternatives will also be provided via a Regulatory Information Service. Shareholders can also contact the Registrar on their helpline at 0371 384 2714 (or from overseas on +44 1 21 415 7047) if they have any questions about the operation of the DRIS in respect of any relevant dividend. Whether or not you should elect to receive new Ordinary Shares instead of cash in respect of any future relevant dividends may depend on your own personal tax circumstances. Please note, the tax treatment may change during the period for which the Scrip Dividend Scheme is available. **For the avoidance of doubt, if you currently participate in the Company's DRIS and do not wish to cancel your standing mandate, there is no need to complete a new Mandate Form as your existing mandate will stand.** For general enquiries about the DRIS please contact the Registrar on 0371 384 2714 (or from overseas on +44 1 21 415 7047) or contact them via their website www.shareview.co.uk. Lines are open from 8:30 a.m. to 5:30 p.m. Monday to Friday (except UK public holidays). Calls to the helpline from outside the UK will be charged at applicable international rates. Calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the DRIS nor give any personal financial, legal or tax advice. ### Summary terms and conditions of the DRIS For the avoidance of doubt, unless the context otherwise requires, all defined terms used in this Appendix have the same meanings as set out in the 'DRIS Terms and Conditions' available on the Company's website at https://www.hargreaveaimvcts.co.uk. #### 1. Participation in the DRIS a. Applicants may join the DRIS by giving notice in writing to the DRIS Manager. The Company, acting through the DRIS Manager, shall have absolute discretion to accept or reject applications to participate in the DRIS. An Applicant shall become a member of the DRIS upon acceptance of his or her application by the DRIS Manager on the Company's behalf. The DRIS Manager will provide written notification if an application is rejected. Only Shareholders or their applicable Nominee Shareholder may join the DRIS. b. In order to participate in the DRIS in relation to a certain Investment Date an Applicant must have notified the DRIS Manager of their intention to participate in the DRIS at least ten Business Days prior to the relevant Investment Day. c. The Company shall not be obliged to accept any application or issue Ordinary Shares hereunder if the Directors so decide in their absolute discretion. The Company may do or refrain from doing anything which, in the reasonable opinion of the Directors, is necessary to comply with the law of any jurisdiction or any rules, regulations or requirement of any regulatory authority or other body which is binding upon the Company or the DRIS Manager. d. The Company and the DRIS Manager shall be entitled, at their absolute discretion at any time and from time to time, to suspend the operation of the DRIS and/or to terminate the DRIS without notice to the Applicants and/or to resolve to pay dividends to Applicants partly by way of cash and partly by way of new Ordinary Shares and/or to refuse to invest dividends due on Ordinary Shares held by a Nominee Shareholder where the DRIS Manager is unable to obtain confirmation of the identity and shareholdings of the relevant Beneficial Shareholder. In the event of termination, the Company shall, subject to the terms and conditions, pay to each Applicant all of the monies held by the Company on his or her behalf under the DRIS. 106 e. Applicants who are not Shareholders may join the DRIS in respect of the number of Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the Shareholder in whose name the Ordinary Shares are held. f. The number of Ordinary Shares held by any such Applicant which are mandated to the DRIS shall be altered immediately following any change to the number of Ordinary Shares in respect of which such Shareholder is the registered holder as entered onto the share register of the Company from time to time. g. Applicants who hold their Ordinary Shares through a Nominee may join the DRIS in respect of the number of Ordinary Shares of the Company specied as Nominee Shareholdings and notied to the DRIS Manager by the Applicant and the Shareholder in whose name the Ordinary Shares are held. 2. Issue of Ordinary Shares under the DRIS a. On an Investment Day, dividends paid, or to be paid, on Ordinary Shares held by, or on behalf of, Applicants who have elected to participate in the DRIS in relation to those Ordinary Shares shall be transferred by the Company to the DRIS. b. On or as soon as practicable after an Investment Day, the funds held within the DRIS on behalf of an Applicant shall be applied on behalf of that Applicant in the subscription for the maximum number of whole new Ordinary Shares as can be acquired with those funds. c. The number of new Ordinary Shares to be allotted to an Applicant shall be calculated by dividing the funds held within the DRIS on behalf of the Applicant by the greater of: I. the latest published net asset value per Ordinary Share (net of all unpaid dividends declared on or before an Investment Day); II. the nominal value per Ordinary Share; and III. the mid-market price per Ordinary Share as quoted on the London Stock Exchange, each at the close of business on the tenth Business Day preceding the date of issue of such Ordinary Shares. Fractions of new Ordinary Shares will not be allotted to Applicants and their entitlement will be rounded down to the nearest whole number of new Ordinary Shares. d. Any balance of cash remaining within the DRIS for the account of an Applicant after an issue of Ordinary Shares is made shall be held by the Company on behalf of the relevant Applicant and added to the cash available in respect of that Applicant for the subscription of Ordinary Shares on the next Investment Day. No interest shall accrue or be payable in favour of any Applicant on any such cash balances carried forward. All cash balances held by the Company will be held as banker and not trustee and as a result will not be held in accordance with any client money rules made by the Financial Conduct Authority from time to time. e. The new Ordinary Shares will rank equally with all existing Ordinary Shares. f. The issue of Ordinary Shares under the DRIS shall be conditional on the following: I. the Company having the requisite Shareholder authorities to allot Ordinary Shares under the DRIS; and II. the Company having not issued Ordinary Shares representing more than 10per cent. of its issued share capital under the DRIS in the 12months immediately preceding the Investment Date, and if this limit is reached in relation to Ordinary Shares to be issued on an Investment Date, the entitlements of each Applicant in relation to that Investment Date will be scaled back on a pro-rata basis. g. The Company shall immediately after the issue of Ordinary Shares under the DRIS take all necessary steps to ensure that those Ordinary Shares shall be admitted to the Ocial List and to trading on the premium segment of the main market of the London Stock Exchange, provided that at the time of such issue the existing Ordinary Shares in issue are so admitted to the Ocial List and to trading on the premium segment of the main market of the London Stock Exchange. h. The DRIS Manager shall as soon as practicable after the issue of Ordinary Shares take all necessary steps to ensure that the Applicants (or, where an Applicant is not a Shareholder, the Shareholder on whose behalf the Ordinary Shares mandated to the DRIS are held) are entered onto the share register of the Company as the registered holders of the Ordinary Shares issued to them in accordance with the DRIS, and that share certicates (unless such Ordinary Shares are to be uncerticated in which case the new Ordinary Shares will be credited to the Applicant’s CREST account) in respect of such Ordinary Shares are issued and delivered to Applicants at their own risk ### 107 Applicants (or such other person as aforesaid) will receive with their share certicates (if any) a statement detailing: I. the total number of Ordinary Shares held at the Investment Day in respect of which a valid election to participate in the DRIS was made; II. the amount of the dividend available for investment and participation in the DRIS; III. the price at which each Ordinary Share was issued under the DRIS; IV. the number of Ordinary Shares issued and the date of issue; and the amount of cash to be carried forward for investment on the next Investment Day. 3. Terminating and amending participation in the DRIS a. An Applicant may at any time by completing a Mandate Form and sending it to the DRIS Manager, terminate his or her participation in the DRIS and withdraw any monies held by the Company on his or her behalf in relation thereto. b. If an Applicant who is a Shareholder shall at any time cease to hold Ordinary Shares, he or she shall be deemed to have submitted a Mandate Form under paragraph3(a) above in respect of his or her participation in the DRIS. Whenever a Nominee Shareholder sells Ordinary Shares on behalf of the Benecial Shareholder, the Nominee Shareholder agrees to notify the DRIS Manager of the full details of the sale as soon as practicable. Neither the Company nor the DRIS Manager shall be responsible for any loss or damage as a result directly or indirectly of a failure by a Nominee Shareholder to comply with such obligation. If a Shareholder in whose name Ordinary Shares are held on behalf of an Applicant shall at any time cease to hold any Ordinary Shares on behalf of that Applicant, he or she shall be deemed to have submitted a Mandate Form under paragraph3(a) above in respect of his or her participation in the DRIS. If notice of termination is served or deemed to have been served, all of the monies held by the Company on the Applicant’s behalf shall be delivered to the Applicant as soon as reasonably practicable at the address set out in the Mandate Form, subject to any deductions which the Company may be entitled or bound to make. Any Mandate Form submitted or deemed to have been submitted as set out above shall not be eective in respect of the next forthcoming Investment Day unless it is received by the DRIS Manager at least ten Business Days prior to such Investment Day. c. Cash balances of less than £1 held on behalf of Applicants who have withdrawn from, or otherwise cease to participate in, the DRIS will not be repaid, but will be donated to a recognised registered charity at the discretion of the Company. 4. Notices All Mandate Forms and any other notices and instructions to be given to the DRIS Manager shall be in writing and delivered or posted to Equiniti Limited, Aspect House, Spencer Road, LancingBN996DA. ### 108 by london@blackandcallow.com www.blackandcallow.com Produced 020 3794 1720 Hargreave Hale AIM VCT plc (Incorporated in England and Wales under the companies act 1985 with registered number 05206425) ® Printed on FSC certified paper. The print factory works to the EMAS standard and its Environmental Management System is certified to ISO 14001. 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